Crypto Next's Leg Up - "Money for AI"
The next bull in crypto comes from agentic, not human, demand.
However, the "why" behind Trump's crypto fixation rarely gets attention: now, I explain.
Old-System Winding Down - But Too Early to Pull the Plug
The US Treasury recently intervened to prevent the largest US source of foreign liquidity - Japan - from dumping American Treasuries and inducing a speculative, self-reinforcing and possibly catastrophic spiral of selling of American sovereign debt.
Too Early to Stop Depending on Foreign Debt Market
Eliminating the American trade deficit proves essential for preventing future interventions: with a neutral or even trade surplus, the foreign market loses its leverage on American assets and interest rates.
Unfortunately, this transition takes many years, and while the Bessent has delivered a miracle in capitalizing very likely over a trillion-dollars of re-shoring investment, no credible expectation exists of a trade surplus in the next two to three years.
Chinese AI War and Korean Alliance Gestures - Spooking Japanese Elite
The elite in Japan would love to remain firmly pro-American in their economic planning. but as mentioned in a prior post, Japan's AI economy faces existential threat from a unified Korean-Chinese AI semiconductor cartel - such a cartel between China and Korea would terminally underprice all Japanese AI capital expenditure and consequently kill Japanese demand for American assets, especially the not-so-desirable US Treasury bonds.
At this precise moment, South Korea remains divided about her future: align with China and permanently under-price American and Japanese semiconductors for a generation, or default to a pro-American stance and tolerate an American-led cartel.
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Korean Anxiety Means Japanese De-risking
With such deep anxiety about Korea possibly turning pro-Chinese and aligning with China's AI market strategy, Japanese insiders naturally de-risked and accordingly positioned for a Japanese trade deficit - a weak Yen and corresponding collapse for US debt by Japanese exporters means pricing-in a Chinese-Korean semiconductor consortium that bankrupts both Japanese and American tech industries.
Hacking: How to Shatter Chinese Semiconductor Demand
The best way to break demand for Chinese semiconductors, including AI chips and even open-models, is to hack them.
ALL HACKING IS AGENTIC, TODAY - ALL OF IT.
However, to maximize the hacking efficacy - to give the hacking agents a "good incentive" that maximizes the damage, the agent must "win a score" - a payoff.
The only money fast enough for agentic hacking is cryptocurrency.
Repeat: THE ONLY MONEY FAST ENOUGH TO INCENTIVE AGENTS TO ATTACK IS CRYPTO.
Hacking China's Semiconductor Exports - Frontier of Markets
The frontier of today's market is the hacking war between China and the US in regards to AI exports: whoever gains the edge, here, demolishes confidence and any dependence on the adversary's entire semiconductor and software exports.
Naturally, agentic AI attacks of such a scale will lead to an actual shooting war - however, both parties led with the "shooting part", already, with sufficient pretext in Taiwan, Ukraine/Baltics, and the Middle East for either escalating an existing war theatre or opening a new region for conflict between the pro-American vs. neo-Soviet forces.
Crypto - New Highs, Ahead
Adversarial and counter-adversarial agentic demand for "rewards" will drive crypto assets to new all-time highs. It remains to be seen if China eventually opens-up her own crypto market, once domestic Chinese AI chip production catches-up to that from the American-led semiconductor cartel.
With retail exhaustion and institutional indifference, sovereign players using crypto as the "latest theatre" not only propels adversarial hacking agents to correctly execute their attacks but also drives further inflows into US-controlled capital markets - renewing another bull-market in crypto only further enriches American stablecoins with fresh reserves for continued US Treasury purchases.