The financial world is on high alert. Secret emergency meetings in the U.S., troubling signals from the Dutch Central Bank, and chaos in the crypto market are raising questions about the stability of the entire system.
Recent weeks have been marked by unrest. The U.S. Federal Reserve quietly called the 25 largest Wall Street banks to an emergency meeting. Simultaneously, the Authority for the Financial Markets (AFM) and De Nederlandsche Bank (DNB) expressed concerns about the increasing fragility of the financial system. This all unfolds against a backdrop of rising interest rates worldwide—from Japan to the U.S.—and declining confidence among consumers and investors.
Bitcoin Under Fire After Trend Break #
It’s not just traditional markets feeling the pressure. The crypto market has seen a sharp decline in recent weeks, leading many investors to ask: are we in a bear market? More importantly, has the well-known four-year cycle of bitcoin (with price increases after a halving) been definitively broken?
Following a major drop on October 10, a massive number of long positions were liquidated. This triggered panic selling, especially among short-term investors. Indicators like the Fear and Greed Index, which hit a reading of eight (near-maximum fear), and selling pressure from ETF investors, show that the market is nervous. Yet, large bitcoin wallets are currently buying the dip, a classic sign of accumulation.
Structural Shifts Visible in Interest Rates, Gold, and Inflation #
Beyond the crypto market, broader financial shifts are underway. The so-called repo markets, which banks use for short-term lending, are showing signs of stress. The central bank may need to start buying government bonds again to ensure liquidity. This would mean the end of the quantitative tightening (QT) program—where the balance sheet is reduced—and the beginning of a new phase of quantitative easing (QE).
At the same time, we see central banks around the world buying gold en masse. This indicates waning confidence in government bonds and even in the U.S. dollar. Japan is also playing a role: the country is slowly ending its so-called carry trade, which is reducing global liquidity. This affects risky investments like crypto.
Caution Advised, but Also Opportunities for Investors #
What is becoming clear is that we are entering a transitional phase. Central banks cannot continue to shrink their balance sheets indefinitely without risking disruption. Investors are therefore seeking alternatives like precious metals and crypto. Madelon Vos advocates for diversifying assets, including through gold and silver, and by purchasing bitcoin at regular intervals through monthly investments (dollar-cost averaging).
Although the sentiment is currently negative, these moments can be interesting for long-term investors. The Bitcoin price is currently hovering around $87,000. Vos notes that her own investment portfolio is still up 182% from her initial investment, despite the recent drop. The big question remains: is this the end of the cycle, or the beginning of a new era in crypto?