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JUST IN: 🇺🇸 Pro-Bitcoin Kevin Warsh officially sworn in as new Federal Reserve Chair.

THIS SHOULD BE IMPOSSIBLE. A country whose economy grew over 1,100% in the last 20 years, posted a record breaking $1.19 trillion trade surplus, and became the world's second largest economy has a stock market that is still 33% below its 2007 peak while global markets hitting all time highs almost daily. The Shanghai Composite is sitting around 4,113 points today. The US market delivered over 600% returns in the same period. China overtook Japan as the world's largest auto exporter, grew GDP at 5% in Q1 2026, and built the most dominant manufacturing base on earth. But its stock market went backwards. The first structural problem is who is actually trading. 90% of daily volume in China is retail investors chasing momentum compared to 20% in the US. In the US, pension funds, insurance companies, sovereign wealth funds, and institutional asset managers provide a stable base of long term capital that absorbs volatility and compounds returns over decades. In China, that base barely exists. What fills the gap instead are tens of millions of individual retail investors making short term directional bets based on government policy signals, social media sentiment, and momentum. When sentiment turns, everyone exits at the same time. When a government policy hints at sector support, everyone piles in simultaneously. This creates violent swings in both directions but no sustainable upward trend because there is no patient institutional capital holding positions through cycles. The second problem sits in every Chinese household. 70% of personal wealth in China is locked in real estate. For two decades, Chinese families treated property as the only reliable store of value because savings accounts paid near zero interest and the stock market was too volatile to trust. This created the world's most property dependent household balance sheet. Then the property market started collapsing in 2021 when Beijing forced developers to deleverage. The 46 largest developers are now carrying $753 billion in combined debt. Evergrande was wound up with $300 billion in liabilities. China Vanke, once the country's largest homebuilder, is struggling to reschedule its own debt. Home prices have fallen back to 2005 levels in real terms. New home sales are down nearly 50% from peak. China currently has 27 months of unsold housing inventory nationally, with some Tier 3 and Tier 4 cities sitting on 40 months of supply. Goldman Sachs projects another 10% decline in prices before the market bottoms, with no floor expected before 2027. When the asset holding 70% of your wealth is in a five year freefall, you do not spend, you do not invest in stocks, and you hold cash. The result is $1 trillion in excess household savings sitting completely idle on the sidelines rather than flowing into the economy or markets. The third problem is the government itself. Not because it deliberately suppresses stocks, but because it consistently prioritizes political control and social stability over the conditions that allow markets to compound. In 2020, Beijing decided property developers had become too leveraged and systemically dangerous. It introduced the Three Red Lines policy, which capped developer borrowing overnight. The resulting credit crunch triggered the collapse of Evergrande and dozens of other developers, wiped out millions of homebuyers who had paid deposits on unfinished apartments, and sent property investment down 17.2% in 2025 alone. In 2021, Beijing decided the private tutoring industry was creating social inequality and crushing birth rates. It banned for-profit tutoring companies from teaching core school subjects overnight. Companies like TAL Education and New Oriental lost 90% of their market cap in weeks. Later that year, it decided Didi had listed in the US without proper data security approvals and forced the company to delist from the New York Stock Exchange within months of its IPO. The entire tech sector lost over $1 trillion in combined market cap during the crackdown. Every foreign investor who holds Chinese stocks permanently prices in the risk that their entire sector could be regulated out of existence by Monday morning. That governance discount is not irrational. It is based on direct repeated experience. And it never goes away regardless of how strong the underlying business fundamentals are. Factory gate prices have been in deflation for over three years straight. China's manufacturing sector produces far more than domestic consumers can absorb, so it exports the surplus at thin margins. This is not a short term imbalance. It is a structural consequence of an economy that has spent decades prioritizing investment and production over consumption. Final household consumption is only 53% of China's GDP compared to 68% in the US. Chinese workers earn wages that are too low relative to productivity to drive meaningful domestic demand. Wages grew just 3.8% in urban areas in 2025, below the level needed to shift consumer behavior. And because domestic demand is structurally weak, the corporate earnings that drive stock prices remain structurally capped regardless of how fast GDP grows. GDP growth in China primarily benefits state enterprises, exporters, and the government through tax revenues. It does not translate into the broad corporate earnings growth that pushes stock indices higher. Local government debt has hit $18.9 trillion, roughly equal to China's entire GDP. For years, local governments funded themselves primarily through land sales to property developers. When the property market collapsed, that revenue stream collapsed with it. Local governments now borrow new debt primarily to service existing debt, with two thirds of all new borrowing used just to pay off old obligations. This creates a fiscal drag that limits Beijing's ability to stimulate the economy through the local government infrastructure investment that drove growth for decades. The AI boom was the first genuine catalyst in years that could finally create a new earnings engine independent of property and government infrastructure spending. When DeepSeek launched its R1 model in early 2025 and demonstrated that frontier AI could be built at a fraction of US costs, Chinese tech stocks added $1.3 trillion in market cap almost instantly. Investors rushed into anything with AI exposure. ETFs with AI in the name saw massive inflows. Then China's securities regulator, the CSRC, issued formal notices to listed companies and ETF managers demanding detailed disclosures of their AI-related revenue exposure, business plans, and risk factors within 20 business days. Companies that could not demonstrate genuine AI revenue were warned against using AI branding to inflate their valuations. The CSRC also began reviewing ETFs with AI in their name to verify whether their holdings actually matched their stated investment mandate. The momentum collapsed immediately as investors realized the government was going to regulate the AI rally the same way it regulated every other rally before it. DeepSeek's V4 model launched in April 2026 built entirely on Huawei chips, signaling genuine AI hardware independence from Nvidia. But the market reaction was far more muted the second time because investors already knew what would follow. China built the second largest economy on earth. It runs the largest trade surplus in world history. Its factories dominate global manufacturing. DeepSeek proved it can compete at the frontier of AI. And its stock market is still 33% below where it was in 2007 because the structural math that connects economic output to investor returns has been broken for two decades. Retail dominated trading creates volatility without direction. Property wealth destruction keeps household savings frozen. Government intervention reprices entire sectors overnight. Corporate earnings remain capped by weak domestic consumption. And every time a genuine catalyst appears, the same governance reflex that created these problems in the first place steps in to slow it down.

Bitcoin Update.

What a beautiful 30-day chart

Arcium is now 2x faster under load. v0.10.3, now on Mainnet. Here's what's new↓

When people stop believing in crypto, it’s usually a great time to take positions for the next cycle People have stopped believing for quite some time now I wouldn’t be surprised if the worst is behind Leaving many sidelined in cash and stablecoins

Coinbase Bitcoin Premium has now reached its lowest level since Feb 5th. Institutions are looking for an exit here.