Eating melon at home! Recently, the biggest drama on Wall Street is not which altcoin is pumping, but Trump going all out, pointing at Federal Reserve Chairman Powell's nose and frantically urging rate cuts! From the time the understanding king took office in January to the end of June, he has publicly called for rate cuts at least 17 times! An average of three times a month! Words like 'too late, Mr.', 'fool', 'wooden-headed', 'idiot', 'big waste'... his vocabulary for scolding is full; he just needs to personally go to the Federal Reserve to press the rate cut button!

Why is the understanding king so anxious like an ant on a hot pan?

1. Tariff aftereffects, urgently need liquidity injection

Understanding king increases tariffs, imported goods become expensive, inflation pressure mounts (although he stubbornly says 'there is no inflation'). It's like project parties in the crypto space issuing tokens indiscriminately leading to inflation; he urgently needs the Federal Reserve to 'cut rates' as a strong antidote (liquidity injection) to hedge against it! (Wealth) has already said, he just wants to 'offset' his own reckless moves.

2. The government is crazily broke, interest rates are crushing mountains

Interest expenses on U.S. debt are exploding, reaching $776 billion in the past 8 months! The understanding king's calculations are on point: cutting rates by 2 points saves $600 billion in interest each year! This is equivalent to a massive liquidity injection for the U.S. government! Where will the saved money go?

3. The election battle is imminent, need to 'pump up the market'

Stimulating the economy and protecting the stock market are all part of the understanding king's KPIs. Rate cuts = releasing liquidity = 'pumping up the market' in traditional markets. If the stock market rises, voters are happy, and reelection becomes possible. This logic is the same as project parties in the crypto space pumping and protecting the market!

Why does Powell stubbornly refuse to cut rates?

Master Powell faced the understanding king's 'death stare' and the whole network's calls, and he withstood the pressure, becoming the 'most stubborn holder'. Why?

1. Data hasn't collapsed, no need for FOMO

Master Powell holds cards: Unemployment rate stabilizing at a low of 4.5%, wage growth over 4%, consumption and business investment data show the economy is still growing moderately (1.5%-2%). Although GDP has slightly adjusted (Q1 -0.3%), manufacturing PMI (soft data) is a bit weak, but overall it hasn't collapsed! Master Powell feels: It's not time to 'rescue the market'; holding cash (interest rates) is more prudent.

2. Afraid of TM inflation rising from the ashes

This is what Powell fears the most: the 'black swan'. If he cuts rates too fiercely now, and if the understanding king's tariffs really ignite inflation (companies take the opportunity to raise prices), or if rate cuts trigger excessive FOMO in the market, then he will have to resort to violent rate hikes later, with a higher cost! He now wants to wait for a clearer signal of 'sustainable low inflation'.

3. The Federal Reserve's 'independence' persona cannot collapse

Being scolded by the president and obeying to cut rates? How will the Federal Reserve operate in the future? Independence is crucial; Powell must firmly guard this line, or else his credibility will drop to zero, worse than project parties in the crypto space that run away.

The crypto space is most concerned: when will the rate cut cycle start?

Various opinions in the document are conflicting, but the overall signal is clear:

A cut is inevitable this year, but the timing remains a mystery! Almost all forecasts point to the second half of 2024 as the start of rate cuts; the consensus is that the rate cut cycle will begin.

1. Radical faction (like Jamie Cox): July!

2. Mainstream faction (market expectations, Citigroup adjustments, Harker hints): September! (Highest probability!)

3. Cautious faction (CEO of Franklin Templeton): Only one cut this year! (possibly in December)

The dot plot suggests: The Federal Reserve internally predicts two rate cuts before the end of the year (50 basis points), and another 50 basis points in 2026.

Key trigger points: Inflation data (especially core PCE) continuously cooling + significant loosening in the labor market (rising unemployment rate). Once these two bombs explode, the rate cut rocket will ignite immediately!

Impact of rate cuts on the crypto space

Brothers, here comes the focus! What does a rate cut mean for the crypto space? Four big words: nuclear bomb-level good news!

1. The depreciation of the dollar causes BTC and other crypto assets to soar! Rate cuts = cheaper dollar (devaluation). Core crypto assets like BTC as 'hard currency against fiat currency inflation' become increasingly attractive! Weak dollar, strong BTC! This is the most basic logic chain.

2. Massive liquidity influx, rising tide lifts all boats! Once the global liquidity floodgates open, massive low-cost funds (hot money) in traditional markets will desperately seek high-yield assets. After experiencing halving and the approval of ETFs, mainstream coins like BTC and ETH are the most attractive 'high Beta' targets! Giant whales and hedge funds are already eager to go!

3. Risk appetite sharply increases, altcoin season frenzy! In a rate cut environment, market risk appetite significantly rises. Funds will not only be satisfied with the stable returns of BTC/ETH, but will inevitably spill over to altcoins in search of higher multiples of wealth.

4. The narratives of DeFi, RWA, etc., will explode again! A low-interest rate environment is more conducive to the development of on-chain interest-earning protocols (DeFi). At the same time, the yield advantage of tokenizing real-world assets (RWA) will be more prominent as traditional interest rates decline, potentially igniting related sectors.

Summary

The understanding king's crazy calls for 'rate cuts' in the traditional world are also shouting 'bull market' for us in the crypto space! Master Powell is currently stubbornly refusing to cut, but the trend is set; the water flow will eventually overflow. Brothers, get your wallets ready, check your runways, an epic crypto flight is about to take off! Don't wait until FOMO kicks in to slap your thighs!