What actually happens after a rate cut?
Rate cuts are one of the most powerful financial events in the financial market. When the Fed cuts rates, it sends a strong signal that liquidity conditions are easing. Lower interest rates make borrowing cheaper, reduce pressure in the financial markets, and often push investors toward high-return assets like crypto and tech stocks.
But the reaction is not always straightforward. Markets move based on expectations, guidance, and how confident the Fed is about the future.
Let's break the entire situation into multiple levels:
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🔥 Level 1: Immediate market reaction
When the rate cut is announced:
The algorithm reacts instantly.
BTC, ETH, and equity often see rapid upward spikes.
Short positions get squeezed.
Liquidity briefly disappears, causing sharp rises.
This first 1-5 minutes is pure volatility, not direction.
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🔥 Level 2: The actual market direction depends on Powell
After reading the statement, traders await Powell's press conference, which determines the actual direction.
If Powell says:
"We expect a gradual reduction in the coming quarter."
"Economic conditions are improving."
"Inflation is under control."
It creates strong bullish confidence.
Markets rise and maintain a trend.
If Powell says:
"We are not yet promising further cuts."
"The risk of inflation remains."
"We are closely monitoring the situation."
It creates uncertainty and the market:
is higher
Then the market falls as traders take profits.
Short up → then down.
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🔥 Level 3: Why crypto moves quickly
Crypto responds faster compared to traditional markets because:
It is more liquidity-sensitive.
Traders react immediately to changes in funding.
Whales use volatility for aggressive moves.
So a rate cut always creates a reaction, even if temporary.
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🔥 Overall forecast (clear and direct)
✔ If the Fed cuts rates and sounds positive →
The market rises sharply and remains upward.
✔ If the Fed cuts rates but sounds cautious →
The market first drops → then falls → then moves sideways.
✔ If the Fed does not cut rates (unlikely) →
The market declines immediately.
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🎯 My final VIP view
Based on an 84% probability:
The market is likely to rise immediately after the rate cut.
But maintaining an upward trend depends 100% on Powell's tone.$ETH
If Powell signals further rate cuts →
Big bullish wave.
If Powell is cautious →
Short pump and then retracement.$BTC
