White House trade advisor Peter Navarro's recent fierce criticism of Fed Chair Powell has pushed the July rate cut discussion to the forefront. This "trade strategist" for Trump pointed out three major policy errors by Powell: the 2018 rate hikes suppressed growth, a slow response to early 2021 inflation, and the current high rates exacerbating the debt burden. His logic is clear—if rates are 50 basis points too high, GDP could lose 0.5 percentage points, and consumer credit card debt and national debt costs will worsen.
But what the crypto market is more concerned about is: If the Fed really cuts rates in July, will Bitcoin repeat the surge of the 2019 rate cut cycle, or will it fall into the 2024 "buy the rumor, sell the news" trap?
Historical data gives contradictory signals:
2019 rate cut cycle: After the first rate cut, Bitcoin rose by 18.59%, but the subsequent two rate cuts resulted in declines of 28% and 30%, indicating that the market's capacity to digest continuous easing is limited. Emergency rate cuts in 2020: After a brief surge, Bitcoin fell back, with analysis indicating that crypto assets are influenced by liquidity but not dominated by traditional market sentiment; spot holders did not sell off due to fluctuations in the US stock market. December 2024 rate cut: Bitcoin plunged 4.6% in a single day, as the Federal Reserve hinted that the number of rate cuts in 2025 would be fewer than expected, and the tightening liquidity expectations suppressed risk appetite.
Current market undercurrents
It is worth noting that Navarro's radical calls differ from the Fed's actual actions. Although the probability of a July rate cut is only 10%, the probability for September has reached 75%, and the market is trading on the expectation of "policy delays but eventual easing." This expectation management strategy is akin to the Fed's forward guidance in March 2023, which reversed market confidence—at that time, Bitcoin rebounded 19% within 72 hours.
Tap the avatar, follow me, and let me know what you think about the current market? Let's chat in the comments! The crypto space has both opportunities and risks; staying vigilant and timing is key.
