Breaking News! The U.S. interest rate cut disrupts the cryptocurrency market. Will there be a short-term plunge followed by a mid-term bull market? The truth is too crazy!

The impact of the U.S. interest rate cut on the cryptocurrency market cannot be simply summarized. Theoretically, a rate cut increases market liquidity and enhances risk appetite, creating a favorable environment for the cryptocurrency market. However, the actual market trends are complex and varied.

In the short term, volatility is the norm. The market's reaction to interest rate cut news is influenced by various factors, such as whether the news has been anticipated. If the positive news is fully priced in and some investors take profits, this may lead to a price surge followed by a plunge, similar to the situation with Bitcoin in December 2025. If the market generally expects the interest rate cut to initiate a loosening cycle, leading to optimistic sentiment, cryptocurrency prices may rise, as seen in Bitcoin’s performance in September 2024.

In the medium to long term, during a rate cut cycle, low interest rates diminish the attractiveness of traditional savings and fixed-income assets, which may cause some funds to flow into cryptocurrencies in search of higher returns. The significant bull market in cryptocurrencies after the Federal Reserve’s sharp interest rate cuts in 2020 is a testament to this.

However, the interest rate cut is not the only factor affecting the cryptocurrency market. The reasons for the rate cut are crucial. If it is in response to concerns about an economic recession, market panic may suppress the performance of risk assets, including cryptocurrencies. Political and regulatory expectations are also very important; the attitudes of political figures and the clarity of regulatory policies will affect market confidence. Moreover, the cryptocurrency market itself has high volatility and widespread leverage trading, which can easily amplify short-term fluctuations.

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