BTC fell by 1.7%, ETH fell by over 4.8%, and smaller coins like ADA, DOGE, and POL fell by more than 1.5%-3.0%.
Many people are confused:
Isn't it said that the Federal Reserve not cutting rates means inflation is still present? Shouldn't that mean buying Bitcoin as a hedge?
So why is there a widespread decline? Is it a sign of a crash?
Today I will explain the underlying logic in simple terms.
One. Core reason: Market disappointment + unmet expectations
1. This time the Federal Reserve did not cut rates, but more importantly—did not release a 'dovish' signal!
2. The market had already speculated in advance that 'rate cuts might begin in the second half of the year', so many funds entered early to position themselves in risk assets (including Bitcoin and Ethereum).
3. The reality is: The Federal Reserve's stance remains hawkish, and its vigilance against inflation has not relaxed.
Thus, we see the typical 'good news realized = bad news'.
It's not that they fell because rates weren't cut, but because everyone was betting on a rate cut, which ended up being unmet, leading to disappointed selling.
Two. Is Bitcoin really an 'inflation hedge asset'? Or a 'risk asset'?
Many people have a misconception that:
Inflation is here ➡️ Money has depreciated ➡️ Buy BTC as a hedge
Indeed, this statement holds theoretically, but only applies to long-term trends.
In reality, especially in the short-term market, most funds treat BTC and ETH as 'high-risk assets' rather than safe havens like gold.
When interest rates remain high, the dollar is strong, and global funds are tight:
1. Investors will choose to sell off crypto assets and return to cash or dollar assets
2. The crypto market is treated as a 'cash machine', which naturally leads to declines
Three. What other reasons contribute to this?
1. Technical breakdown:
Both BTC and ETH are on the edge of important support; a breakdown will trigger a large number of automatic stop-loss orders, leading to sell-offs.
2. ETF net outflows intensify:
A few days ago, the Bitcoin ETF (like BlackRock's IBIT) saw outflows, indicating institutions are also withdrawing.
In summary:
Although Bitcoin and other cryptocurrencies have a long-term anti-inflation logic, in the current environment where the Federal Reserve is not cutting rates and the dollar remains strong, they are still the first to be sold off as risk assets in the short term.
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