This Thursday morning, the Federal Reserve will hold a monetary policy meeting. It is almost a certainty that there will be no interest rate cuts in May, and everyone is more concerned about whether there will be rate cuts in June and July. According to CME data, the probability of no rate cut in May is 97.6%, and hopes are already pinned on June. Recent GDP and non-farm payroll data have also led the market to believe that the Federal Reserve will not rush to cut rates in the short term. The fact that there will be no rate cuts has already been digested by the market, so it is not considered a major negative. What really makes retail investors anxious is what Powell will say.

Recently, the market has been guessing when the Federal Reserve will stop tapering, like trying to guess what’s in a blind box. The most reliable current opinion is that they might pause in June or July. However, it should be clarified that even if tapering stops, to see the Federal Reserve start injecting money back into the market, we will have to wait until a significant economic event occurs.

Here, we need to clarify two concepts: expanding the balance sheet and quantitative easing (QE) are not the same thing. Expanding the balance sheet is akin to normal liquidity injections, while QE is like being put on a ventilator. With interest rates still as high as 4.5%, unless there is an economic collapse, there is no need for such drastic measures as QE. The fastest recorded rate cut in history took 14 months, but looking at the current situation, the economy is unlikely to fall apart that badly.

However, if Trump does something, then the plot may take a different turn. Trump is best at coming up with new terminology, essentially finding ways to inject liquidity into the market. Whether it’s legitimate balance sheet expansion or creative tricks, as long as there’s liquidity, it’s good news. Even a little liquidity is better than draining it. When hot money increases, risk assets like the stock market and cryptocurrency market will definitely soar, and that’s the real cornerstone of a bull market!

From ICO, DEFI, NFT, Gamefi, Metaverse, MEME (which has been around since 2020), AI (which started in early 2023), inscriptions, what comes next? Payfi, RWA, or what? AI and MEME will definitely continue. Based on the current known situation and a more optimistic timeline, we might see an increase in market liquidity in the second half of the year. So after the American meeting concludes, we need to pay more attention to the market!