In the last couple of days, Trump has made big news again, directly telling the Federal Reserve: 'The next chairman must lower interest rates immediately!' This guy has no subtlety at all, it's like he threw a bomb into the financial market.
Why is this such a big deal?
First, the background: Trump and the Federal Reserve have long had a feud. Last year, he almost forced Powell to resign using the excuse of 'cost overruns' on renovations, and this August he directly dismissed Federal Reserve Governor Cook. Now he even declared that 'the Federal Reserve must listen to the White House.'
My opinion is very simple: this is not about economic demand, it's political maneuvering.
What Trump wants is a 'quick fix': cutting rates can temporarily suppress government debt interest (interest on U.S. Treasury bonds has exceeded defense spending), and it can also give the stock market a boost, creating a 'false sense of prosperity'.
But at what cost? Refer to Turkey and Hungary—once the central bank becomes a political tool, currency depreciation and skyrocketing inflation can happen in an instant. The Turkish lira has depreciated by 88% over the past few years, and inflation once soared to 85%!
The market shouldn't be too naive: cutting rates ≠ bull market is stable
Some people, upon hearing about rate cuts, shout, 'The bull market is here!', but I think it's time to pour some cold water on that.
Short-term sentiment might be high: Historically, after rate cuts, funds flow into emerging markets and high-risk assets, and Bitcoin may rise accordingly. For example, when the Fed cut rates last September, Bitcoin broke through $62,000 that day.
But in the long run, it’s all about risks: U.S. inflation is still above 3%. If rates are forcibly cut for political purposes, it could repeat the 'Great Inflation' of the 1970s (inflation rate soared to 13%). By then, the Federal Reserve might be forced to slam on the brakes, and the market could collapse even more severely.
My judgment: Jumping in now to bet on rate cuts is like dancing on the edge of a cliff—if the rhythm is wrong, it could end badly. Especially for contract players, the recent liquidation of 400,000 people in the crypto market is a lesson.
The 'double-edged sword' of cryptocurrencies
With Trump making such a fuss, the crypto market will be even more stimulating:
Benefits: If the dollar weakens due to rate cuts, gold and Bitcoin, as 'inflation-resistant assets', may be bought up. Some institutions have already positioned themselves in advance, such as MicroStrategy holding 240,000 Bitcoins.
Risk: The market will be more sensitive. Powell only said last time, 'No need to cut rates quickly', and Bitcoin immediately fell below $41,000. If U.S. inflation rebounds in the future, or if the government shuts down (which might happen at the end of September), the crypto space will likely face massive liquidations again.
Finally, let's say some harsh truths
Trump's pressure this time appears to be about 'saving the economy', but in reality, he is using the Federal Reserve as a political bargaining chip. However, the market is not foolish; once the credit of the dollar collapses (de-dollarization is already accelerating), both U.S. stocks and cryptocurrencies will suffer.
My advice: Don't let the news lead you by the nose. Manage your positions well; it’s better to earn less than to be cannon fodder in policy games. If you really believe in the long-term value of Bitcoin, regular investments are more prudent than going all in.
Remember: In a casino, surviving longer is the winner. Follow Xiang Ge to learn more about the latest information and knowledge in the crypto space, providing you with precise points, becoming your guide in the crypto world; learning is your greatest wealth!#加密市场反弹 #加密市场观察 $ETH
