With the Federal Reserve's rate cut in place, Bitcoin instantly surged past $118,000, which is just the prologue to the grand drama of capital transfer.
The Federal Reserve cut interest rates by 25 basis points overnight, lowering the target range for the federal funds rate to 4.00%-4.25%, marking the first rate cut since 2025. As soon as the news broke, Bitcoin surged past $118,000, and Ethereum also crossed the $4,600 mark.
The gates of traditional finance are opening, and the curtain has been raised on the crypto market stage. As a crypto analyst who has experienced multiple cycles, I clearly feel that when the yields on traditional assets are compressed, capital will naturally seek higher-yielding outlets, and the crypto market is gradually becoming the first stop for this tide.
01 Historical Review: Interest Rate Cuts and the Resonance with the Crypto Market
Historically, the crypto market has become increasingly sensitive to shifts in global monetary policy. From 2019 to the present, we have experienced three distinct interest rate cut cycles, each bringing different market performances.
In 2019, the Federal Reserve's preventive interest rate cut of 75 basis points had little impact on Bitcoin, which even retraced. However, the panic-induced rate cuts brought on by the pandemic in 2020 were completely different— the Federal Reserve directly lowered interest rates to zero and initiated 'unlimited quantitative easing,' resulting in Bitcoin soaring from $3,800 to $69,000, an increase of over 17 times.
Why does the market react so differently to the same interest rate cuts? The answer is simple: the magnitude of the rate cut determines the scale of funds.
In 2020, the Federal Reserve's balance sheet expanded from $4 trillion to $9 trillion, suddenly adding $5 trillion in liquidity to the market. Even if only 1% flows into the crypto market, that amounts to $50 billion, equivalent to one-third of the entire crypto market capitalization at that time.
The current interest rate cut cycle resembles the 'preventive rate cut' of 1995, rather than the 'rescue rate cut' of 2007. This means that we may not see the crazy surge like in 2020, but the logic of steady growth is more reliable.
02 Institutional Movements: From Tentative Exploration to Full Embrace
Wall Street's attitude toward crypto assets has fundamentally changed. Institutional investors now account for about 95% of the overall inflow into cryptocurrencies, while the proportion of retail investors has dropped to only 5%-6%, significantly altering market dominance.
Asset management giants like BlackRock are allocating 1%-2% of their investment portfolios to digital assets, accelerating their layout through ETFs and on-chain tokenized products. By August 2025, institutional investors' cumulative investment in Bitcoin had surpassed $414 billion.
Corporate-level movements are becoming more apparent. MicroStrategy currently holds approximately 244,800 Bitcoin, with a total value of about $14 billion, accounting for nearly 1% of the total historical issuance of Bitcoin. More importantly, an increasing number of listed companies are beginning to follow suit.
Trump signed an executive order allowing 401(k) retirement accounts to invest in cryptocurrencies, which has disruptive significance. If only 1% of the assets in U.S. retirement accounts were allocated to cryptocurrencies, it could bring in about $120 billion in funding.
03 Market Signals: Interpretation of Multi-dimensional Indicators
From on-chain data, the crypto market has entered a new development stage. The price of Bitcoin once broke through $118,000, and the total market capitalization globally is steadily growing.
Analysts have divergent views on Bitcoin's future trajectory, but bullish voices dominate. BitMEX co-founder Arthur Hayes believes that interest rate cuts may exacerbate inflation, thereby benefiting inflation-resistant assets like Bitcoin. Tom Lee, chairman of the BitMine board, pointed out that the biggest beneficiaries of interest rate cuts will be Bitcoin and Ethereum.
It is worth noting that the expectations of interest rate cuts themselves can sometimes influence the market more than the actual implementation of cuts. On September 14, just a few days before the Federal Reserve's meeting, the cryptocurrency market experienced significant volatility, with over 120,000 liquidations in the past 24 hours.
This volatility indicates that the market is highly sensitive to monetary policy, reminding investors to carefully manage risks.
04 Personal Analysis and Strategic Recommendations
As an analyst who has long tracked the crypto market, I believe there are indeed significant opportunities in the current environment, but investors need to remain rational. There are clear signs of overheating in the market in the short term, with leverage rising rapidly, and risks cannot be ignored.
Focus on value rather than speculation
In a low-interest-rate environment, funds are more likely to flow into high-risk assets, but mainstream crypto assets like Bitcoin and Ethereum may prove more durable than many niche tokens. These assets have solid technological foundations and market positions, making them the preferred targets for institutional funds.
As the tokenization of real-world assets (RWA) transitions from concept to real asset classes, by October 2025, the total market capitalization of RWA tokens is expected to exceed $23 billion, nearly quadrupling year-on-year. This trend will further consolidate the status of mainstream crypto assets.
Pay attention to risk control
The combination of high volatility and high leverage is the most prominent risk point in the crypto market. Not long ago, the price of Bitcoin suddenly turned down after reaching a high, dropping more than 6% within just a few hours, resulting in over 170,000 people being liquidated.
Avoid using excessively high leverage, especially before and after major macroeconomic events. During times of heightened market volatility, leveraged trading can lead to catastrophic consequences.
Seize phase opportunities
During interest rate cut cycles, investment strategies should also be adjusted at different stages. Before rate cuts, consider allocating to mainstream assets like Bitcoin and Ethereum; after rate cuts, high-risk altcoins may perform better; towards the end of the cycle, gradually take profits and shift to stablecoins.
The development of Layer 2 solutions provides new opportunities, with second-layer networks like Arbitrum, Base, and Optimism attracting most of the new locked-in volume and capital flow. The maturity of these infrastructures offers investors more choices.
The future financial network will be a fusion system where various assets like DeFi, NFT, government bonds, and ETFs coexist on the same public chain. As the Federal Reserve may further cut interest rates in the future, more funds will continue to flow into the crypto market.
The direction of the flow has been determined; the key is who can position themselves advantageously before liquidity floods the market. Only those investors who can see the big trends while recognizing subtle differences can truly reap rewards in this cycle.#巨鲸动向 $ETH
