The Federal Reserve announced on June 18 that it would maintain the benchmark interest rate in the range of 4.25%-4.50%, marking the fourth consecutive pause in rate hikes since December 2024.

1. Short-term impact: Liquidity suppression and increased market volatility

  1. Risk preference is suppressed
    The high interest rate environment continues to suppress market liquidity, reducing investors' willingness to allocate to high-risk assets such as cryptocurrencies. Historical data shows that when interest rates remain high, funds tend to flow into safe assets like bonds, leading to a decline in crypto market trading volume. If the Federal Reserve conveys a 'longer and higher' signal, Bitcoin may testthe support level of $63,000, while Ethereum dips to$3,300.

  2. Policy statements and Powell's remarks serve as volatility catalysts
    Although interest rates remain unchanged, Powell's wording in the press conference may trigger significant volatility:

    • Dovish signals: could push Bitcoin to break through the resistance level of $66,000, stimulating short-term buying.

    • Hawkish stance: may lead to a synchronized sell-off of crypto assets and US stocks, with Bitcoin potentially dropping to$63,000and below.
      The current market's expectation for interest rate cuts in 2025 has been reduced from 'four times' to 'less than twice', reinforcing the trend of a stronger dollar and further suppressing cryptocurrency valuations.

2. Mid-term trend: Range fluctuations and breakthrough conditions

  1. Range-bound pattern under 'unchanged interest rates'
    If the Federal Reserve delays interest rate cuts until Q4 2025 or even later, it may lead to Bitcoin continuously fluctuating between the expected cycle highs of$105,000and$123,000. In similar historical cycles, the volatility of the crypto market significantly decreased, with investors adopting a wait-and-see approach.

  2. Breakthroughs depend on two major turning points

    • Deterioration of inflation and economic data: If the unemployment rate rises or inflation rapidly falls to the 2% target, it may force the Federal Reserve to cut rates early, releasing liquidity into the crypto market.

    • Geopolitical clarity and regulatory developments: The escalation of the Iran-Israel conflict or the passage of the US stablecoin bill may trigger capital hedging or institutional entry points.

3. Long-term logic: Correlation between rate-cut cycles and the crypto market

Loose policies remain the cornerstone of the bull market
Historical data shows that within 3-6 months after the start of the last three rounds of Federal Reserve rate-cutting cycles, Bitcoin averaged an increase of over 60%. If rate cuts materialize in 2025, combined with the Bitcoin halving effect and favorable Asian policies, a new upward cycle may begin.

Institutional fund reallocation
Under the current high interest rates, institutional funds are concentrated in defensive allocations such as BTC spot ETFs, which may shift towards high-growth assets like Ethereum and Solana, as well as RWA tracks after interest rate cuts.

4. Big D strategy recommendations

  1. Bet on 'interest rate cut expectation differences' and event-driven opportunities, such as CPI data releases and the policy games of the US election with Trump supporting crypto regulation.


  2. Invest in Bitcoin spot ETFs like GBTC or allocate to compliant tracks like stablecoins and PerpDEX.

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