Policy dividends and deficit crises resonate: the "abnormal" prosperity behind Bitcoin's breakthrough of $120,000.

The current market situation is far from "normal." Bitcoin's rise can only be described as crazy, as it continues to soar along a steep linear trajectory. Interest rates are continuously climbing, the dollar has depreciated by 11% within six months, and the total market capitalization of the crypto market has surged by one trillion dollars in just three months.

What exactly has happened? The answer is clear: Bitcoin has entered "crisis mode."

The momentum of Bitcoin today is so strong that it can repeatedly refresh its all-time high (ATH) within a day. Since the U.S. House of Representatives passed President Trump's "Great and Beautiful Act" on July 3, the price of Bitcoin has skyrocketed by $15,000. If gold hasn't raised alarms, then Bitcoin's surge should be enough to sound the alarm.

Are there any clearer signals than this? Let's take a look at the comparison of Bitcoin and the US Dollar Index ($DXY) from the beginning of the year to now, where two obvious divergence points have appeared:

April 9 (after the 90-day tariff suspension period ends)

July 1 (when the "Big and Beautiful Act" was passed)

Everything is self-evident.

As July begins, market data shows that the United States recorded a fiscal deficit of $316 billion in May 2025 alone. This is the third highest monthly deficit level in history. Initially, there were expectations in the market due to Musk's opposition to the spending bill.

However, this hope quickly faded away in early July.

At that time, the rise of Bitcoin seemed to benefit from the market's anticipation of the trade agreement. But it turned out that regardless of whether the trade agreement was announced, the market results were astonishingly consistent: bond yields rose, Bitcoin skyrocketed, the dollar fell, and gold prices increased.

This is by no means the so-called "normal" market condition. We have anticipated and seized this trend in advance: we decisively bought during the corrections at $80,000, $90,000, and $100,000, and accurately predicted the target price level of $115,000.

Last Friday, we further raised the target to above $120,000 - this price level has just been reached.

This is undoubtedly a double boost (double benefit) for gold and Bitcoin.

Since the beginning of the year, the S&P 500 index has fallen by 15% when priced in Bitcoin. If we look back to 2012, the S&P 500 index priced in Bitcoin has plummeted an astonishing 99.98%. The current situation is: Bitcoin's value has skyrocketed, while the dollar's value has shrunk.

Emphasize again, closely monitor the U.S. budget deficit.

More importantly, institutional funds seem to be rushing in, chasing this round of Bitcoin market.

The asset management scale (AUM) of the Bitcoin ETF IBIT has rapidly climbed to a record $76 billion in less than 350 days. In comparison, the world's largest gold ETF GLD took over 15 years to reach the same scale.

In our in-depth communication with institutional investors, we noticed a recurring consensus: broadly speaking, institutional capital such as family offices and hedge funds can no longer ignore Bitcoin. Even "conservative" funds are considering allocating about 1% of their Assets Under Management (AUM) to Bitcoin.

It should be noted that we refer to Bitcoin entering "crisis mode" not as a bearish view on other assets. In fact, the short-term "stimulus" effect of increased deficit spending is "positive," and risk assets may still continue to rise in the short term.

Of course, its long-term negative effects cannot be ignored.

Ironically, as long as the deficit issue is resolved, multiple dilemmas in the U.S. will be easily addressed. It could lower interest rates, curb inflation, and boost the dollar. But Bitcoin "knows better": this is almost impossible to happen - just look at how its rise accelerated after the spending bill was passed.

The changes in the economic landscape are precisely where the opportunities for investors lie. As the market gradually digests this ongoing deficit spending crisis, capital is undergoing large-scale rotation, and asset prices are therefore experiencing dramatic fluctuations.

Finally, interestingly, according to ZeroHedge, the leveraged short positions in Ethereum are currently at an all-time high. This is similar to what we observed before the market bottomed out in April 2025.

Is a large-scale crypto market short squeeze about to unfold? Things may be brewing...