The Federal Reserve's rate cut of 25 basis points this time appears calm on the surface, but in reality, it hides a tumultuous undercurrent, unsettling global markets. The rate cut is just a facade; the unspoken "tricks" behind it are what truly make the market sweat.

This rate cut comes with one good news and three bad news. The good news is that money will become more available, while the bad news brings continuous troubles.

The good news is that the Federal Reserve announced it will "purchase short-term government bonds," buying about $40 billion each month. Although the Federal Reserve denies this is "quantitative easing" (QE), the market is well aware that liquidity is on the way. After all, "not QE" often ends up being QE. Once the news broke, the "QE trade" heated up immediately: U.S. stocks rose, U.S. Treasuries rose (yields fell), gold surged to $4,200, and Bitcoin also skyrocketed back to $94,000.

As for the bad news, the first is a split within the Federal Reserve. This time, there were three dissenting votes, marking the first time since 2019 that internal conflicts could no longer be hidden. Governor Milan feels that a 25 basis point cut is insufficient and argues for a 50 basis point cut; the presidents of the Chicago and Kansas City Fed believe that rates are low enough and should not be cut further. The differing views within the Federal Reserve regarding the future economic outlook are stark—one side fears stubborn inflation while the other side fears weakening employment. With inconsistent policies, every time economic data is released, officials will have to take sides, resulting in market fluctuations that will surely be larger than in the past. Powell himself stated, "This situation is rare; the dual objectives are in conflict."

The second piece of bad news is that the dot plot does not align with market expectations. The market is hoping for at least two rate cuts in 2026, but the dot plot indicates only one cut in both 2026 and 2027. This is far from what the market anticipated.

The third piece of bad news is that the Federal Reserve has not provided a clear signal for future rate cuts. Powell mentioned that the current interest rate policy is quite appropriate and that they need to wait and see how the economy evolves. Monetary policy needs to be flexible, determined by each meeting. His comments are not hawkish, but still lean towards caution.

In short, the Federal Reserve's rate cut this time is not due to a strong economy, but rather a lack of confidence. The market has risen, but the rise is not due to the rate cut; it’s because there is more money.

Trump also stated that there should have been a larger cut—at least double. #FederalReserveRateCut #CryptocurrencyMarketVolatility $BTC

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