From a short-term perspective (1-4 weeks), everyone must stabilize; do not blindly chase the highs. Why is that? Once the Federal Reserve announces an interest rate cut, it often means that the previously anticipated benefits have materialized, and the first reaction of funds is often to 'secure profits'. Those who positioned themselves early and bet on the interest rate cut will likely withdraw, while some leveraged long positions may face liquidation due to market volatility. Looking back at March 2020, after the Federal Reserve cut rates, Bitcoin's price was directly halved, which is a real 'old script' that occurred. If at this moment you impulsively chase the highs, you may quickly become a bag holder, which is not worth the loss. Just like last June, when the Federal Reserve's interest rate cut expectations materialized, Bitcoin dropped from $42,000 to $36,000 in just three days, resulting in heavy losses for many retail investors who chased the highs.
However, in the long run, this wave of 'liquidity' is indeed coming. The interest rate cut means lower borrowing costs, and the liquidity in the market will become more abundant, which is likely to flow into various markets, including the cryptocurrency sector. Moreover, the ETH ETF is highly likely to be approved; these two factors act like the 'dual core engine' of the cryptocurrency market, injecting strong momentum into it. It's important to note that after the Bitcoin ETF was launched, there was an average daily inflow of $300 million, driving the price of Bitcoin upwards. Once the ETH ETF is approved, Ethereum and its ecosystem, including staking, L2, and DeFi sectors, are expected to experience explosive growth. By then, don't be surprised if Bitcoin hits $150,000; it’s not impossible for the entire cryptocurrency market to witness a 'Nasdaq-style' prosperity.
Specifically, there may be three scenarios:
Best-case scenario (probability about 40%): The interest rate cut policy is successfully implemented, and the ETH ETF is genuinely launched. With the push of these dual favorable factors, the bull market will accelerate, and Bitcoin prices are expected to surge to $150,000. By then, the entire market's confidence will be greatly boosted, and funds will flood in, leading to a significant rise in various cryptocurrencies.
Most likely scenario (probability about 50%): Although the Federal Reserve cuts rates as scheduled, economic data performs poorly, the US stock market experiences volatility, subsequently affecting the cryptocurrency market. In this situation, mainstream coins may enter a consolidation phase, while altcoins lacking real value support may experience a drastic drop akin to 'blood flowing like rivers'. Just like in 2018, when the US stock market corrected significantly, the cryptocurrency market also suffered, with many altcoins dropping over 90%.
Worst-case scenario (probability about 10%): If inflation reignites, the Federal Reserve may take measures to 'pause interest rate cuts' or even raise rates. This would undoubtedly be a heavy blow to the cryptocurrency market. Referencing previous situations, Bitcoin and other cryptocurrencies may experience another halving. In 2022, due to high inflation, the Federal Reserve continuously raised rates, causing Bitcoin to drop from $69,000 to $15,000, which is a painful lesson.
So, in the face of these possible situations, what should retail investors do?
It's actually quite simple:
In the short term, do not chase the highs, even if the price of Bitcoin surges to $130,000, once the positive news materializes, you should immediately reduce your position. Never be the last fool to get on the bus. Market sentiment changes quickly, and once funds start to withdraw, the speed of price decline may exceed your imagination.
Keep a close eye on the approval status of the ETH ETF; if approved, you can appropriately allocate some funds to ETH and its ecosystem coins (such as OP, SSV, etc.); if the approval fails, you must immediately cut losses and exit, without holding any luck-based mindset.
At the same time, keep some ammunition ready; when the market experiences a sharp decline, gradually buy the dip in BTC and ETH. In an era of liquidity, these leading coins have broader consensus and stronger risk resistance, making them the safest choice relatively speaking.
In short, the bull market in the cryptocurrency world relies on 'liquidity', which means sufficient capital flow, rather than just pure dreams. The interest rate cut in September is like the faucet just being turned on, and there are many variables to follow. In the short term, there may be a market for harvesting profits, but in the long run, a grand performance might really unfold. Everyone must remain calm, don't panic or go crazy; if you endure, you may be able to smile in the end.
