Many bloggers in the industry often use small-scale events and technical indicators to predict the bull and bear markets of crypto assets, but they ignore a key point: the trends in financial markets are driven by liquidity, which is controlled by macroeconomic policies. The bull and bear transitions in the crypto market from 2020 to 2023 are solid evidence of this. In the last cycle, the Federal Reserve's monetary policy dominated the market direction, while small-scale events only affected short-term K-line slopes.

The beginning of the bull market was fueled by the Federal Reserve's QE:

In 2020, the COVID-19 pandemic impacted the global economy, causing stock markets to plummet and unemployment rates to soar. Bitcoin fell over 65% from its high at the beginning of the year, dropping to $3,500. To rescue the market, the Federal Reserve urgently cut interest rates by 50 basis points on March 3, followed by another cut of 100 basis points on the 15th, and restarted quantitative easing, planning to purchase $700 billion in government bonds and mortgage-backed securities. By the end of March, it announced unlimited quantitative easing, reversing market expectations, and within a month, the price soared from $3,500 to $8,000.

Under ultra-low interest rates, the yields on traditional assets were compressed, leading funds to flow into crypto assets, with Bitcoin being seen as an 'anti-inflation' tool. At the same time, emerging fields such as DeFi and NFTs surged, attracting a lot of new capital, and traditional financial institutions began to include Bitcoin on their balance sheets. Driven by multiple factors, Bitcoin's price skyrocketed from the March 2020 low to a high of $68,000 in November 2021.

However, the Federal Reserve's large-scale asset purchases from 2020 to 2022 led to uncontrollable inflation, with the U.S. inflation index rising to 7% in 2022, a 40-year high. The Federal Reserve had to adjust its monetary policy, releasing hawkish signals at the end of 2021, indicating the start of interest rate hikes and the end of QE in 2022. Market panic led to liquidations, and risk assets like Bitcoin were sold off, with prices significantly retracing from their peaks.

In March 2022, the Federal Reserve officially ended QE and started raising interest rates, increasing the benchmark rate by 25 basis points, causing Bitcoin's price to quickly drop below $45,000. In May, it raised rates by 50 basis points, and Bitcoin fell below $30,000. In June, with a 75 basis point hike, Bitcoin plummeted to around $17,000, with the total market capitalization of the crypto market evaporating by over 80%, marking the arrival of a super bear market.

It is evident that the long-term fluctuations in financial markets are rooted in changes in macroeconomic policy. Global central bank monetary policies determine the general direction of the market by affecting market liquidity. Currently, the crypto market is still influenced by macroeconomic factors. If you want to understand the impact of this round of interest rate cuts on Bitcoin prices, or whether $BTC can reach a new high, feel free to follow, and I will personally help you clarify.