Currently, the market has a clear bet on the Federal Reserve's actions in September. (This is an important indicator for global investors tracking expectations of Federal Reserve policy), the probability of a 25 basis point rate cut in September has reached 90.9%; while the more aggressive expectation of 'a 50 basis point cut', although slightly up from 8% before the CPI data was released, is still only at 9.1%, indicating that the market's expectations for the extent of rate cuts are stabilizing, with divergences narrowing.
Looking further ahead, the cumulative rate cut expectations for October are even more noteworthy: the market believes the probability of a cumulative 50 basis point cut by October has soared to 84.3%, while the probability of only a 25 basis point cut is down to 7.3%, meaning that most capital has already begun to position for the 'continuation of the rate cut cycle' logic.
Ming Ge's exclusive viewpoint.
Interest rate cuts ≠ immediate surge: Don't let the market's enthusiasm cloud your judgment. The impact of interest rate cuts on the crypto space is often 'slow burn.' It takes time for funds to flow from traditional markets (like US stocks and bonds) to the crypto market, especially now that institutions are still observing. Recently, the S&P 500 index has been fluctuating at historical highs, and the yield on 10-year US Treasuries is around 3.8%, a sensitive range. The volatility of these traditional assets makes institutions hesitant to adjust their positions; it is unrealistic for the crypto market to immediately 'take over' the capital dividend.
Bitcoin's 'anti-inflation' strategy needs a change: In the past, the market logic was straightforward: Fed cuts interest rates → USD liquidity eases → USD index weakens → Bitcoin is favored as a 'non-sovereign anti-inflation asset.' But now it's different—major global central banks (like the ECB and BoJ) are all following suit with easing, leading to an overall liquidity flood in the market. Bitcoin's positioning may shift from 'safe-haven asset' to 'competitor of risk assets.' Simply put, capital may first rush into familiar risk assets like US tech stocks and commodities. For Bitcoin to get a slice of the pie, it needs a stronger narrative logic (like halving expectations and institutional ETF expansion).
Beware of 'buying expectations and selling facts': This is a hidden rule that all experienced players should understand. If in September the rate is really cut by only 25 basis points (in line with mainstream market expectations), the previously risen coin prices may experience a brief correction due to 'good news being priced in.' But if it unexpectedly drops by 50 basis points, one should be cautious of institutions using the good news to offload—after all, the major premise that 'the rate cut cycle has already started' has long been priced in by the market. Sudden aggressive actions may lead funds to feel that 'subsequent space is limited,' prompting them to cash out.
Ultimately, interest rate cuts are merely the 'appetizer' of this market cycle. The real 'main course' that can determine the next major market trend in the crypto space is when the Federal Reserve will stop tapering (tapering refers to the Fed's withdrawal of liquidity from the market by selling government bonds and other assets; conversely, stopping tapering means further easing of liquidity). When tapering ends, and global liquidity truly enters a 'limitless easing' phase, the crypto market may welcome a higher magnitude of capital influx.
Want to know the specific trigger points for the next wave of trends in the crypto space? Follow Ming Ge, who will later dissect the deep connections between tapering and coin prices, as well as the true movements of institutional capital, bringing you more grounded deep analysis and operational strategies for the crypto market to help you keep pace amid volatility and achieve certain returns.
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