The Federal Reserve cut interest rates by 25 basis points and simultaneously initiated RMP purchases of 40 billion!
Don't just say it's flooding the market when you see buying bonds; let's first explain what RMP is and how it differs from QE. RMP is a neutral monetary policy, mainly involving the central bank purchasing short-term debt from banks, equivalent to the Federal Reserve replenishing the reserve accounts held by banks. This mainly benefits the banks and has little impact on the overall market, but it can prevent a black swan event where bank profits decline or even lead to bankruptcy.
This rate cut was anticipated, with the main focus on the rate-cutting path and expectations for 2026. Currently, the CME's dot plot suggests that there is a high probability of only two rate cuts in 2026 and 2027, with the earliest cut starting in April 2026. The magnitude of this rate cut is directly half that of 2025, and Mr. Powell’s remarks this time seem somewhat dovish; it still depends on how the market interprets it, feeling like a data hawk disguised as a dove. However, in terms of expectations, it seems that there are not too many hopes for rate cuts in the next two years.
With low liquidity expectations, we need to be cautious about a high-level adjustment; after all, what reason is there to sustain such a high market value? In the past, it could be said it was to combat inflation, but what if inflation really disappears in two years? We might be begging for inflation.
The performance of BTC has also seen a rise followed by a fall, and the poor expectations for liquidity still have a significant impact on BTC. 95k has still not been broken, which is a bit regrettable, $BTC
