Federal Reserve cuts interest rates, cryptocurrency market declines? December may welcome a crazy bull, the truth is heart-wrenching
Yesterday, the Federal Reserve cut interest rates by 25 basis points, but the cryptocurrency market fell. Many people are confused: isn't a rate cut good for cryptocurrencies?
First, let's clarify: a rate cut should make money cheaper, weaken the dollar, lower the cost of trading cryptocurrencies, and lead to an influx of funds pushing prices up. However, this time, the positive effects were already fully priced in; after the September meeting, the market had bet on a rate cut in October, with BTC rising from 104,000 at the beginning of October to 112,000, an increase of nearly 8% in advance. When the news landed, there were no new surprises, and funds 'buy the expectation and sell the fact', directly taking profits and leaving.
On a deeper level, there is a looming bearish pressure: the Trump tariff war has reignited, inflation expectations are rising, the Federal Reserve's statements are ambiguous, and the strengthening dollar index directly suppresses cryptocurrency prices. Additionally, after the 'black swan' event in October, 19 billion in leverage was liquidated, and 40 billion in funds exited exchanges, making the market like a bucket with a hole at the bottom, depleting liquidity.
Leverage and altcoins are even worse: products like WBETH and USDe that carry leverage have decoupled in sequence, with a total market value shrinking by 28% in October, and altcoins plunging by 40%-70%, with liquidity so poor that they collapse upon contact. Retail investors curse the 'fraud market', institutions are watching, and confidence has dissipated.
However, I am optimistic about the end of QT on December 1, which will bring an additional 95 billion in liquidity monthly, plus two more rate cuts, equivalent to 'invisible QE'. Coupled with the historical peak period 450 days after the Bitcoin halving, with a weak dollar and inflation hedging, the 'digital gold' attribute is expected to explode.
Now, November is a period of volatility and bottoming out; if we get through it, liquidity may warm up in December, and rockets may really launch. The market often slaps us in the face, but remember: winter is short, spring is long.
If you are unclear about specific timing, you can follow Jin Min, who provides real-time reminders 24 hours a day for friends who have followed me before
