Federal Reserve Rate Cut: The 'Sweet' and 'Risk' of Cryptocurrency

The Federal Reserve's September policy meeting has concluded, and a 25 basis point rate cut has arrived as expected. This decision, although supported by a vast majority of members, hides concerns about economic pressure. In the meeting minutes, 'the labor market remains robust' has quietly turned into 'employment growth is slowing,' with only 22,000 new jobs added in August and the unemployment rate rising to 4.3%, weak data that has become a key impetus for the rate cut. Even though inflation remains above the 2% target, the policy balance ultimately tilts toward stabilizing the economy.

For the cryptocurrency market, the rate cut is undoubtedly a 'shot in the arm' for liquidity. The decline in interest rates boosts the attractiveness of risk assets, and with channels such as Bitcoin spot ETFs improving, the flow of funds into cryptocurrency assets is increasingly smooth. On the day of the rate cut, the market capitalization surged by $80 billion. However, amidst the celebration, one must remain clear-headed: Bitcoin and Ethereum have already risen over 15% in recent months, and the positive news may lead to a 'pullback after expectation fulfillment,' similar trends were observed during the rate cut cycles of 2019 and 2020.

More noteworthy is the structural differentiation in the market. While Bitcoin continues to dominate market capitalization, Ethereum's annual growth rate has surpassed that of Bitcoin, and altcoins like Solana have risen over 20% in a single week, showcasing the cyclical characteristic of 'mainstream coins leading, altcoins following.' However, there are evident disagreements within the Federal Reserve regarding the future path of rate cuts; half of the 19 committee members expect two more cuts before the end of the year, while the other half advocates for a slowdown or even a pause. This uncertainty may exacerbate price volatility.

For ordinary investors, the current fear and greed index has entered an extreme greed zone, with over $270 million in leveraged liquidations in the past 24 hours, highlighting the risks of blindly chasing highs. In the short term, one can seize the liquidity easing dividend, but it is essential to closely monitor the policy guidance from the dot plot and set stop-loss orders at critical price levels. In the medium to long term, cryptocurrency asset valuation is shifting from liquidity-driven to 'fundamentals + policy' pricing. Only by tracking economic data, regulatory dynamics, and changes in market structure can one maintain a foothold amidst volatility.

A rate cut is not a 'perpetual motion machine' for bull markets but is the beginning of a new round of market competition. Keeping a close eye on capital flows and policy signals is more important than following market sentiment. #FederalReserveRateCut #加密市场分化