In the past few days, the most discussed topic in the cryptocurrency community is not the Dogecoin ETF, but the Federal Reserve's news of "unexpected easing" — Wall Street institutions have collectively changed their stance. Goldman Sachs' latest report on October 12 directly raised the probability of "a 75 basis point rate cut next week" from 20% to 55%, and Morgan Stanley bluntly stated that "this is a necessary action to address economic weakness." It's worth noting that prior to this, the market generally expected a maximum cut of 50 basis points. Once the expectation of a 75 basis point cut emerged, not only did U.S. stock futures surge, but Bitcoin also jumped from 52,000 to 55,000, rising over 5% in 24 hours. The entire network is asking: Is the epic market trend of 2020, where "injections lead to bull markets," coming back?
1. First understand: Why is the 75 basis point cut 'beyond expectations'? What are institutions betting on?
Not all rate cuts can ignite the market; the key for 75 basis points lies in 'far exceeding the Fed's past rhythm' — Since the 2008 financial crisis, the Fed has only cut rates more than 50 basis points three times (October 2008, March 2020, March 2023), and each time it was an emergency response when the economy faced clear downward pressure. This time, institutions are willing to bet on 75 basis points, backed by two hard data points:
1. Clear 'weak signals' from the US economy
The US September PMI data (Manufacturing Purchasing Managers Index) released in October dropped to 47.8, 2.2 points below the boom-bust line (50), setting a new low since June 2023; meanwhile, the unemployment rate rose slightly from 3.8% to 3.9%, and hourly wage growth slowed to 4.1% — this means that while 'inflationary pressures are easing', the momentum for economic recovery is also weakening, forcing the Fed to 'cut rates more aggressively' to support the economy. Goldman Sachs directly stated in its report: 'If the cut is only 50 basis points, it may not prevent Q4 consumer data from declining; 75 basis points is the minimum threshold for 'recession prevention'.'
2. The global central bank's 'easing wave' support
Not only the Federal Reserve but also the European Central Bank has already cut by 50 basis points at the beginning of October, and the Bank of England has also signaled 'possibly cutting by 25 basis points in November', as major global economies enter a 'synchronized easing' cycle. In this case, if the Federal Reserve's 'efforts are insufficient', it may lead to a weaker dollar index and capital outflows. A 75 basis point cut can keep pace with the global rhythm and avoid excessive dilution of the dollar's credit — Morgan Stanley analysts directly stated in a CNBC interview: 'This is both ‘passive following’ and ‘active control’, balancing the economy and the dollar's status.'
2. Historical comparison: How did the liquidity in 2020 lift the cryptocurrency market? What is different now?
Many people shout 'replicate 2020', but first, we need to understand how the bull market of 2020 came about, and how the current cryptocurrency market compares to then, what are the 'similarities' and 'differences':
1. Details of the 'liquidity bull market' in 2020: It was not just money, but also 'emotional resonance'
In March 2020, the Federal Reserve cut rates not only by 100 basis points to 0-0.25% in one go to hedge against the pandemic, but also initiated unlimited QE (quantitative easing). The growth rate of M2 (broad money supply) in the US surged to 15%, the highest in nearly 40 years. The paths for this hot money to flow into the cryptocurrency market are very clear:
From the retail perspective: At that time, the US issued pandemic relief funds (1,200 dollars per person), many people invested their 'idle money' into cryptocurrency — Glassnode data shows that in Q2 2020, retail addresses holding 100-1000 dollars in BTC increased by 42%, directly driving BTC from 3,800 dollars to 12,000 dollars.
From the institutional perspective: Grayscale increased its holdings of 175,000 BTC in the second half of 2020. At that time, US stocks were highly volatile, and institutions viewed BTC as 'inflation hedge assets', driving more traditional funds into the market. Ultimately, BTC surged to 69,000 dollars in November 2021, and the total market capitalization of the entire cryptocurrency market rose from 180 billion to 3 trillion dollars, a 16-fold increase.
2. 2025 vs 2020: The cryptocurrency market has 'a thicker foundation but fuller expectations'
The current cryptocurrency market compared to 2020 has one significant difference: 'more compliance tools and greater expectations':
Positive expectations are reflected early: The current BTC price is 55,000 dollars, which has partly reflected the expectation of '50 basis points cut' — CoinGecko data shows that since October, 28 billion dollars have flowed into the crypto market, 15 billion more than the same period in 2020. If 75 basis points are implemented, the 'new positive space' may be smaller than in 2020.
The path for institutions to enter is more compliant: In 2020, institutions could only buy BTC through Grayscale Trust. Now there are spot ETFs (12 BTC ETFs approved in the US), futures ETFs, and giants like BlackRock and Vanguard have 'crypto asset allocation plans' — Morgan Stanley predicts that if 75 basis points are implemented, institutions may add 50 billion dollars in crypto asset allocations, with 30 billion flowing into BTC ETFs and 20 billion into ETH and compliant altcoins (like SOL, ADA).
The ecosystem is more mature: In 2020, the cryptocurrency market mainly relied on 'speculating on coins', but now the ETH merge has stabilized the POS ecosystem (TVL reaches 128 billion), DeFi has practical applications (DeFi trading volume is projected to reach 18 trillion dollars in Q3 2025), and NFTs and games also have stable users — this means that hot money can not only speculate on prices but also circulate within the ecosystem, potentially extending the market cycle but also diverting the gains of individual coins.
3. If 75 basis points are implemented: Who benefits the most from the cryptocurrency market? How do different players respond?
Not all cryptocurrencies will receive 'equal treatment'. The funds brought by the 75 basis point cut will flow in layers based on 'risk preference' and 'consensus strength'. The response strategies of different entities must also vary:
1. Cryptocurrency layering: BTC rises first, ETH follows, altcoins are emotion-driven
First tier: BTC (highest certainty)
BTC, as the 'core hedge' of the cryptocurrency market, will be the first to receive institutional funds — Goldman Sachs predicts that within one month after the rate cut, BTC may surge to 62,000-65,000 dollars, for two reasons: first, institutional allocation demand (Grayscale and BlackRock's ETFs will passively increase their holdings), second, retail investors' 'chasing sentiment' (after the 2020 rate cut, BTC's first-month gain was 1.2 times that of ETH). Currently, among BTC holding addresses, 'long-term addresses holding for over 1 year' account for 68%, which indicates relatively small selling pressure, making it suitable for conservative players.
Second tier: ETH (ecosystem support, less elasticity)
ETH's price increase will be slower than BTC, but more sustainable — On the one hand, after the rate cut, the demand for borrowing in DeFi will rise (currently, the ETH lending rate on Compound is 8.2%, and if the rate is cut by 75 basis points, it may drop to 5.5%, stimulating more users to stake for mining); on the other hand, the 'merge benefits' of ETH are still being released, and three Layer 2 mainnets are expected to launch in Q4 2025, which will boost ecosystem activity. Morgan Stanley predicts that ETH may rise from the current 2,200 dollars to 2,800-3,000 dollars, a gain of about 30%.
Third tier: Altcoins (emotion-driven, highest volatility)
Among altcoins, older coins with a 'consensus basis' (like SOL, DOGE, ADA) will be safer than 'small coins' — SOL benefits from the NFT and gaming ecosystem, DOGE has ETF expectations backing it, ADA has RWA landing support. These coins may 'catch up' after BTC and ETH stabilize, but the gains may vary (for example, if DOGE's sentiment is right, it may rise 40%, but small-cap altcoins may rise 10% and then correct). Be cautious: The average gain of altcoins in 2020 was 3 times that of BTC, but in 2025, compliance requirements are higher, and the 'risk of explosion' for small altcoins is also greater, so don’t blindly chase the new.
2. Player responses: Retail investors should not chase high prices, institutions focus on allocation
Retail investors: Don’t bet on 'going all in', leave room for adding positions
Currently, BTC has risen to 55,000. If it continues to rise to 58,000 before the rate cut, a correction may occur afterward with 'buying expectations and selling facts' (refer to when the Fed cut 50 basis points in 2024, BTC rose to 48,000 before correcting to 42,000). It is recommended that retail investors keep their current positions at 50%-60%. If it corrects below 50,000 after the rate cut, then add positions by 20%-30%; if it directly rises to 65,000, consider taking profits at 30% for safety.
Institutions: Increase spot positions, minimize leverage
Institutional funds pay more attention to 'long-term allocation'; for example, BlackRock plans to increase its crypto asset allocation from 5% to 8% after the rate cut, but will prioritize spot ETFs over leveraged contracts — In 2020, some institutions suffered from leverage trading on BTC and were liquidated during corrections. Now institutions are more cautious, with leverage generally controlled within 1.2 times to avoid short-term volatility risks.
4. Don’t ignore: These two risks could break the 'bull market fantasy'
Not every rate cut guarantees an epic market; these two potential risks must be monitored:
1. The old rule of 'expectations being realized leads to corrections'
The market has almost fully digested the positive expectation of 'cutting by 50 basis points'. If 75 basis points are implemented, some funds may 'sell on good news' — for example, when the Fed cut by 25 basis points in 2023, BTC rose to 42,000 before the rate cut and fell to 39,000 on the day of the cut, due to 'expectations being fully priced in'. Currently, the futures market for BTC has reached a 'long-short ratio' of 1.8, at a historical high. If negative news occurs (such as a rebound in US inflation after the rate cut), it may trigger long liquidations, leading to a short-term crash.
2. The risks of the cryptocurrency market's 'self-bubble'
The total market capitalization of the cryptocurrency market in 2020 was 180 billion, and it has now reached 2.9 trillion dollars, 16 times the size at that time. It is nearly impossible to replicate a market behavior of 'rising 16 times' — currently, the P/E ratio of the cryptocurrency market (calculated based on the cash flow of crypto assets) is about 45 times, higher than the 30 times in 2020, which is not low. If there is no continuous influx of capital (such as institutional allocations not meeting expectations), the market may stagnate after rising for 1-2 months.
5. Summary: The market will come, but don't blindly believe in 'epic levels'
If the Fed cuts rates by 75 basis points, it will indeed provide the cryptocurrency market with a 'booster', but it is more likely to result in 'a medium-sized market movement' (BTC rising 30%-40%, ETH rising 25%-35%), rather than the 'epic bull market' of 2020. The core reason is: the current cryptocurrency market is more mature and regulated, and the 'explosive power' of hot money inflows has weakened, but its 'sustainability' is stronger.
For ordinary players, instead of worrying about 'whether 2020 can be replicated', it is better to focus on 'finding the right targets and controlling positions' — use BTC as a base position, ETH for medium to long term, and a small amount of altcoins for elasticity, while keeping cash on hand to respond to corrections. Remember: There has never been a 'guaranteed profitable' market in the cryptocurrency world. The ones who laugh last are always those who 'understand the logic and are not greedy or panicked'.
If you want to track the latest developments on the Fed's interest rate cuts in real-time (such as next week's FOMC meeting minutes, changes in institutional holdings), key support and resistance levels for BTC/ETH, and different strategies for adding positions/taking profits, feel free to follow Dong Ge Talks Coins — we don’t promote, we don’t paint a rosy picture, we just discuss real market data, institutional logic, and risk points, helping you seize opportunities without falling into traps, sharing more practical insights into crypto investments.
