Chief Economist Fu Peng: Bitcoin Becomes a Leading Indicator of Liquidity, AI Infrastructure May Face Contraction

Fu Peng, Chief Economist of New Fire Group, stated at the monthly client private meeting on July 29 that Bitcoin has evolved into a standard financial asset. In an environment of tightening liquidity, Bitcoin, as a purely liquid asset, has been the first to shrink its circle, becoming a leading indicator of market liquidity. He advised investors to pay attention to the changes in free cash flow of major companies and the structural data of the U.S. options market to identify key turning points. Fu pointed out that the AI industry is currently in a transition period from midstream to downstream, with the infrastructure layer, represented by Nvidia, having entered a mature stage, while the downstream application layer has yet to see breakthroughs similar to ChatGPT. He emphasized that the free cash flow of tech giants turned to zero in the second quarter, and if capital expenditures continue, they will need to be financed at a cost of 6-7%. If there are no returns from the application layer within six months to a year, the growth rate of capital expenditures will decline, putting pressure on the entire upstream chain.