On the evening of December 10, Federal Reserve Chairman Powell officially announced the third interest rate cut of the year, bringing the rate down to a range of 3.50%-3.75%. This meeting not only determined the flow of funds but also released key signals closely related to web3—here are some key points highlighted by small nudges.
1. What did Powell say?
1. Interest rate cut but 'hawkish'. Despite lowering by another 25 basis points, Powell emphasized that inflation risks are skewed to the upside, specifically mentioning that tariff policies are driving up prices. However, he also clearly ruled out the possibility of interest rate hikes, stating that no one currently expects interest rate increases as a baseline.
2. Pay attention to the employment market. The Fed removed the statement that the unemployment rate is still at a position, acknowledging that employment growth is slowing. Powell even mentioned that if data biases are adjusted, employment growth since April may have slightly turned negative.
3. Continue to inject liquidity; in the coming months, maintain a scale of $40 billion/month in government bond purchases to inject liquidity into the market.
2. What does this mean for web3?
1. Liquidity is beneficial for crypto assets; interest rate cuts mean that the attractiveness of traditional low-yield bonds (such as government bonds) decreases, and funds may flow into higher-yield areas. Historical data shows that during the interest rate cut cycle from 2019 to 2020, BTC increased by 305%. However, it should be noted that prior to this interest rate cut, the market had already speculated in advance, and BTC fell from $126,000 to $82,000. Therefore, the key lies in the expectation game rather than the interest rate cut itself.
2. DeFi and RWA tracks will benefit. After the Fed's liquidity injection, DeFi protocols may welcome incremental funds, especially compliant real-world asset (RWA) projects, such as tokenized bonds and real estate. The recent regulatory framework in Hong Kong has accelerated landing, and protocols like Aave have already laid out plans.
3. Beware of the risk of overdrawn expectations, Powell stated that decisions will be made at each meeting, and the pace of interest rate cuts next year is uncertain. If inflation rebounds and tariffs continue to drive up prices, then the easing policy may slow down, and the crypto market may experience fluctuations again.
3. What should ordinary players do?
1. Short-term strategy, focus on December's non-farm payroll data! If employment is weak, interest rate cut expectations may rise, and BTC may rebound to $100,000. If data is strong, it could also break the $80,000 support.
2. Mid-term allocation, prefer a BTC + compliant RWA combination, such as tokenized government bond projects, with strong anti-volatility, avoid chasing small coins at highs, and beware of conceptual speculation.
3. Opportunities for practitioners, the interest rate cut cycle is a golden period for R&D! Focus on Layer2 technology, compliant applications landing, and stay away from purely conceptual projects.
4. A brief summary from Xiaotui.
Powell's speech confirmed a loose but cautious tone, supporting the economy with liquidity but not daring to be blindly optimistic. For web3 players, the liquidity dividend is still present, but the logic of making money has shifted from mindless rises to structural differentiation theory. Remember, be steady and don't get washed out by short-term fluctuations.
Note: The above is only an interpretation and does not constitute any investment advice. Market risks are high, and investment should be cautious.
