It seems like spring has suddenly arrived, and the bull market is back. The market surged for two consecutive days, pushing BTC back to $94,500, while ETH finally returned to around $1,800. The market is no longer so fearful, collectively calling for the bull market to have arrived, but is it really the case?
Firstly, I believe the recent rise is due to two main factors:
First: The change in the Federal Reserve Chairman increases expectations for interest rate cuts.
Second: The market sentiment that has panicked for more than a month needs a rebound to regain confidence.
Why was Federal Reserve Chairman Powell not afraid of President Trump? Ultimately, he was replaced?
In short: Institutional design. The independence of the Federal Reserve Chairman is a deliberately retained “anti-presidential mechanism” in the constitutional framework. The Federal Reserve is a central bank “independent of the White House.”
1) The Chairman is nominated by the President, but the term arrangement is deliberately staggered with the President's term to avoid synchronization.
2) Decisions are made collectively by the FOMC, further decentralizing power.
3) The budget does not rely on congressional appropriations but is self-sustaining.
Even if Trump fires Powell, it is far from sufficient to force the Federal Reserve to cut rates according to his wishes; he may need to replace the entire Federal Reserve Board.
Will interest rate cuts in cryptocurrencies open a crazy bull market?
This question has actually been a focus for many of us, and it is the onset of the crazy bull market that we all anticipated after Trump took office.
1. The macroeconomic logic of interest rate cuts and their potential impact on Bitcoin.
The core mechanism of interest rate cuts: Interest rate cuts stimulate consumption, investment, and economic growth by lowering borrowing costs and deposit rates, while also increasing market liquidity. For risk assets (such as stocks and cryptocurrencies), interest rate cuts typically have the following impacts:
Increased Liquidity: Low interest rates reduce the attractiveness of fixed-income assets (such as bonds), causing funds to flow into high-risk, high-return assets, including Bitcoin.
Rising Inflation Expectations: Interest rate cuts may increase inflation, prompting investors to shift to inflation-resistant assets like gold and Bitcoin.
Weakening U.S. Dollar: Interest rate cuts typically lead to dollar depreciation, which may benefit Bitcoin as a dollar-denominated asset.
The Asset Attributes of Bitcoin: Bitcoin possesses characteristics of both 'digital gold' (safe-haven asset) and high-volatility speculative assets.
Safe Haven Attribute: Limited supply (21 million coins) and decentralization make it a tool for some investors to hedge against inflation and currency devaluation.
Speculative Attribute: Bitcoin prices are driven by market sentiment, leveraged trading, and speculative funds, resulting in high volatility.
Interest rate cuts may boost Bitcoin prices through enhanced demand for safe-haven assets and speculative enthusiasm, but their effect depends on the economic background and market expectations.
2. Historical Review: Bitcoin Performance in Interest Rate Cutting Cycles
2018-2019 Interest Rate Cutting Cycle
Background: The Federal Reserve started cutting interest rates in July 2019 to respond to the global economic slowdown.
Bitcoin Performance: At the end of 2018, Bitcoin prices fell to about $3,000, rebounding from April 2019 due to interest rate cut expectations, rising to $13,000 by July, an increase of about 333%. However, after the formal initiation of interest rate cuts, Bitcoin prices initially fell before rising, dropping to $7,000 at the beginning of 2020, with a decline of over 30%.
Summary: The market will react in advance to expectations of interest rate cuts, but after the actual cuts, many uncertain factors can trigger sell-offs; the recent example is the two rate cuts in 2024.
2020 Pandemic Interest Rate Cutting Cycle:
Background: In March 2020, the Federal Reserve rapidly cut interest rates to near zero due to the COVID-19 pandemic and initiated large-scale quantitative easing (QE).
Bitcoin Performance: Bitcoin skyrocketed from a low of $3,000 in March 2020 to $65,000 at the beginning of 2021, an increase of approximately 2067%.
Summary: The combination of ultra-loose monetary policy, institutional entry (such as MicroStrategy), and retail investor enthusiasm has driven up Bitcoin prices. This round of market activity is seen as a classic case of a 'crazy bull market.'
2022-2023 Interest Rate Hike Cycle:
Background: The Federal Reserve began raising interest rates in March 2022 to curb inflation, causing Bitcoin prices to fall from $45,000 to $15,000, a drop of approximately 67%. This cycle is what we call the bear market.
Summary: Interest rate hike cycles compress liquidity, putting pressure on risk assets generally, particularly Bitcoin, highlighting its sensitivity to monetary policy.
Lessons from History:
3. Current Market Environment Analysis (April 23, 2025)
Macroeconomic Background
Interest Rate Cutting Cycle: 50 basis points cut in September 2024, with expected rate decrease of about 2% over the next two years. The U.S. economy faces slowing growth and weak employment; the rate cut aims to stimulate the economy, but recession concerns remain.
China's Interest Rate Cut Expectations: The People's Bank of China plans further rate cuts to respond to deflation and the real estate crisis, with pressure on renminbi depreciation possibly boosting demand for safe-haven assets.
Global Liquidity: The global monetary easing cycle has begun, increasing the attractiveness of risk assets.
Bitcoin Market
Price Performance: In 2024, Bitcoin broke through $110,000, falling to $74,500 in early 2025, with recent volatility being extreme.
Institutional Participation: Bitcoin spot ETFs attract significant institutional funds, with U.S. ETFs holding approximately 193,000 bitcoins, accounting for about 1% of total supply.
Market Sentiment: The Fear and Greed Index recently dropped to 21, indicating market caution, but long-term bullish sentiment persists.
Unique Catalysts for Bitcoin
Halving Effect: In April 2024, Bitcoin will undergo its fourth halving, with block rewards decreasing to 3.125 coins, reducing supply and raising scarcity expectations. Historically, significant increases usually occur within 1-2 years after halving.
ETF Boom: Spot ETFs in Hong Kong and the U.S. have been approved, enhancing market liquidity and mainstream acceptance.
Regulatory Environment: The Trump administration has nominated crypto-friendly Paul Atkins as SEC Chairman, which may reduce regulatory pressure and benefit market sentiment.
4. Will interest rate cuts trigger a 'crazy bull market'?
Current Background Environment: Global economic soft landing, effective interest rate cuts stimulating growth, and moderate inflation rising.
Conditions for triggering a crazy bull market:
The halving effect combined with interest rate cuts, reducing supply and increasing demand resonance.
Institutions continue to increase holdings, with ETF fund inflows exceeding expectations.
The regulatory environment continues to improve, with mainstream finance further accepting Bitcoin.
Expectations for interest rate cuts by the Federal Reserve, with three rate cut demands in 2025.
Increased safe-haven demand for Bitcoin as digital gold.
Uncertainty from tariffs will lead to an increase in investments in certainty assets.
What will BTC price reach? My personal view is still between $180,000 and $250,000.
In the worst-case scenario: If the Federal Reserve does not cut interest rates in 2025, will Bitcoin enter a bear market? It can be confirmed that the likelihood of no interest rate cuts is low, as U.S. capital and the largest global asset manager BlackRock, along with Trump's behind-the-scenes team, will not allow it. Here is a summary: The consequences of the Federal Reserve not cutting interest rates.
Finally: Many views in this article represent my personal understanding and judgment of the market and do not constitute investment advice for you.