The Federal Reserve cuts interest rates, is spring really coming to the cryptocurrency world?
The Federal Reserve's December meeting just concluded, and interest rates have been lowered by another 25 basis points to 3.50%-3.75%. Powell stated: the U.S. economy is cooling, the job market is weakening, and inflation pressure has shifted from 'stubborn' to 'short-term shock', with the policy focus shifting from anti-inflation to growth preservation. This means that the suppression of high interest rates on risk assets is disappearing.
More critically, the liquidity signal: starting from mid-December, the Federal Reserve will purchase about $40 billion in short-term government bonds each month. Officials emphasize that 'this is not QE', but the actual effect is an increase in bank system reserves and a marginal improvement in dollar liquidity. The market only sees the results: money is beginning to loosen.
Powell's attitude is dovish yet stable—'everything depends on data, there is no preset path for rate cuts', but the current statements are clearly mild. From historical experience, such expressions usually appear in the early stages of a loosening cycle. As long as inflation continues to fall and employment weakens a bit in the next 1-2 months, the Federal Reserve is likely to release more dovish signals.
For the cryptocurrency world, the benefits are tangible:
Medium to long term: lower capital costs + warming liquidity + a weakening dollar, with increased risk appetite, funds will inevitably flow from bonds and wealth management into high-beta assets $BTC , $ETH and other cryptocurrencies, which is a strong positive. Short term: the market has already priced in the expectations of rate cuts, Bitcoin even spiked and then fell back last night, profit-taking and consolidation are very normal, and the sentiment has not yet fully ignited.
The real turning point is not this meeting itself, but the continuous expectations of easing and the sustained release of liquidity. Once inflation stabilizes, employment continues to soften, and Powell signals dovishly again, the capital cycle will truly turn positive, which will be the starting point for the upward trend segment of the crypto market.
The Federal Reserve confirms that the rate cut cycle is still ongoing, and the marginal improvement in liquidity has been initiated, which is overall friendly to risk assets. The spring of the cryptocurrency world is not about getting rich overnight, but rather a cycle that is quietly starting. The real market belongs to those who prepare in advance, not those who rush in only after seeing the news.
