Did the Fed's rate cut backfire? I analyze the data to uncover the truth: short-term pullbacks do not change the long-term bull market!
The Fed cut rates by 25 basis points in October and plans to end the tapering in December. This move should be positive, but U.S. stocks and Bitcoin collectively pulled back. After careful consideration, the core reason is that the market had already treated the 'rate cut' as a sure thing!
For example, it's like knowing the answers to an exam in advance; cramming before the test raises your score, but when the actual test comes, you feel relieved instead. The market plays this way too. Powell's hawkish stance this time is even stronger, directly stating, 'Unless the unemployment rate soars above 4.5%, don't expect another rate cut in December.' Market predictions for a rate cut in December plummeted from 95% to 67.8%, leaving investors stunned by this expectation gap.
But don't panic; the medium to long-term logic hasn't changed! Rate cuts and liquidity will make money cheaper, and funds will eventually flow into risk assets. I checked the on-chain data and found that while Bitcoin has short-term dips, the turnover rate hasn't surged, indicating that long-term holders haven't moved at all, and the selling pressure comes entirely from short-term retail investors.
The Bitcoin reserves on exchanges continue to decrease, and compared to 2019, this situation is quite similar. After Trump included Bitcoin in the strategic reserves, large holders actually bought more as prices fell. The CEO of MicroStrategy even dares to proclaim '150,000 USD by the end of the year, and 20 million USD in the next 20 years!'
In the short term, the key is the correlation between U.S. tech earnings and Bitcoin. Good earnings will lead to a rebound in U.S. stocks, naturally boosting Bitcoin. I stand by the big trend: top players watch the liquidity cycle, second-tier focus on data, and third-tier only look at K-lines. Now, this adjustment is simply giving time for the bullets to fly; the big direction is that the flood will come, and risk assets will eventually rise!
If you’re unsure about timing, you can follow Jin Min, who will provide real-time analysis in the village and give the current best entry points.