At 3 AM, the Federal Reserve officially cut rates by 25 basis points, and the market surged by about 10%. This was mainly due to expectations of the rate cut, but the dot plot shows that the expectation for a rate cut in 2026 is only once, and if there is to be an increase, it will depend on various data to decide whether to increase the frequency of rate cuts.
After the dot plot was released, the market fell from 94,000 to around 90,000, and the current price has already dropped below 90,000.
Two important things were mentioned at the meeting:
There will not be an interest rate hike in the near term. According to the forecast chart, there will be a rate cut once in 2026 and another in 2027.
Some people think that such a small cut is useless, but the usefulness is not just measured by how much it is cut; many other factors must also be considered.
We only need to know that next year and the year after will continue to cut interest rates, which indicates that we are still in a phase of declining interest rates. As long as the interest rate cuts do not stop, it is a good thing for the financial market. In principle, we are still in a rate-cutting cycle, which is a major trend, and major trends do not change easily.
FromDecember 13, the repurchase of 40 billion U.S. dollars of short-term government bonds will occur every month.
This means that the U.S. has begun to take action, injecting liquidity into the financial market and increasing available funds.
Previously, they were tightening funds and reducing balance sheets, but starting from December 1, they have already stopped. From the 13th onward, they will reverse and increase funds, expanding the balance sheet.
It seems that this meeting is similar to previous ones, as they only cut by 25 basis points, and many people feel that there is nothing new.
But this time is completely different; whether it's Powell's attitude or their actual actions, it indicates that things are moving in a positive direction.
The capital market often speculates on expectations, so when interest rate cuts actually land, it may not necessarily mark the beginning of an upward trend; everyone should understand this.
Next, the market's focus may shift to the Bank of Japan's interest rate hike on December 19. Recently, the market has retreated in the short term, which is actually a preemptive reaction because if Japan raises interest rates, it will withdraw some funds from the market.
Moreover, there is usually an expectation of a Christmas crash at the end of the year, I feel that there shouldn't be a major market movement this month, and a breakthrough rebound is unlikely; it is more probable that it will slowly move down in fluctuations. After all, there isn't much significant news to stimulate the market next.
Looking at the medium to long term, I have an intuitive feeling that there are not many new stories to tell in the crypto space, or there aren't any particularly exciting new hotspots to look forward to, aside from the Ethereum staking ETF which has not yet landed; other positives have basically been digested by the market in advance.
So what can we expect next?
It's all about money; indeed, this year's most intuitive increase is actually driven by the consortium along with ETF fund inflows. Although ETF funds occasionally flow in, I believe the main force is still the consortium, as they just entered the market this year and can be said to have not experienced a bear market. Recall how you operated when you first entered the market and suddenly faced a bear market?
The consortium has obviously not given up on the crypto market, and we should pay attention to when these institutions are vigorously buying back, as the signs of the main force will become evident.
Perhaps when the market adjusts, the consortium will re-enter the scene, maybe it will be pushed up by some news stimulus.
In short, this is a relatively important signal for those wanting to buy the dip.