The Federal Reserve's move has left the market a bit bewildered.
After waiting for a long time for the rate cut to finally happen, Powell's subsequent cold water has left everyone feeling chilled. "Another rate cut in December? Not necessarily" — this statement instantly woke up traders who were in a festive mood, causing U.S. stocks to turn down, the dollar to surge, and Bitcoin to shudder.
What lies ahead is a complex situation: while the rate cut has indeed lowered funding costs, how much more the faucet can be opened in the future has suddenly become an unknown. This dilemma is particularly evident in the cryptocurrency space — enjoying the benefits of the rate cut while also worrying about liquidity expectations being discounted.
A key turning point will have to wait until December. First, the Federal Reserve will stop tapering (ending balance sheet reduction), genuinely providing blood transfusions to the market; next comes the next interest rate meeting, when the government shutdown will end, economic data will become clearer, and the Fed will be able to present a more definite roadmap.
To be honest, this kind of volatility may not be a bad thing. When the market transitions from "celebrating the rate cut" to "seeing value before taking action", it can filter out those mediocre projects. Short-term emotions will always pass, mid-term liquidity is about to improve, and those who can truly navigate through cycles are always the ones with solid value.
A bull market may well need to start from such calm.
