Yesterday, my buddy gambled $33.08 million, betting on the Federal Reserve's rate cut.
Indeed, the Federal Reserve cut rates in the early hours.
But within 24 hours, 100,000 people were liquidated, totaling over $200 million.
My buddy's $33.08 million is also in losses.
What shocked me the most was not these numbers, but the brutal pattern I discovered.
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The crypto market is not about events, it's about expectations.
Retail investors' logic: the rate cut happened → this is good news → buy.
Institutions' logic: rate cut expectations emerge → buy in advance → rate cut confirmed → sell.
This is what everyone refers to as 'buying the expectation, selling the fact'.
At the end of October, BTC was at 110,000, and the market started speculating on the 'Federal Reserve's rate cut in December' expectation.
In November, expectations fell short, BTC plummeted from 110,000 to around 80,000.
This is 'buying the expectation, selling the fact'.
In the early hours of December 11, the Federal Reserve really did cut rates; retail investors felt the opportunity had come and bought in at 95,000.
As a result, 24 hours later, BTC fell to 89,000, and 100,000 people were liquidated.
Retail investors buy after 'the fact happens', institutions sell to retail investors, that's the difference.
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But this time there is a more fatal issue: Powell hinted that there would only be 1 rate cut in 2026.
The market originally expected 2-3 rate cuts in 2026, but now it's down to just 1 cut.
Expectations fell short again, so prices continued to drop.
Retail investors hear 'rate cut' as short-term good news.
Institutions see a long-term bearish signal of 'no rate cuts next year'.
By the time retail investors realize, they have already been liquidated.
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I wrote on December 1: The Bank of Japan will raise interest rates, and the $14 trillion carry trade may collapse.
Many people criticized me for being bearish at that time.
But look at the data:
- At the end of October: BTC at 114,000
- At the end of November: BTC dropped to around 90,000
- On December 11: BTC dropped from 94,500 to 90,000
It's not because the Federal Reserve cut rates, but because of the expectation of Japan's rate hike + the Federal Reserve's decision not to cut rates in 2026.
The Federal Reserve cut interest rates by 25 basis points, unable to stop the outflow of dollar liquidity caused by Japan's rate hikes.
Japan's meeting on December 18 has an 80-90% probability of raising interest rates. If they do raise rates, BTC may drop again.
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When everyone is discussing a certain positive factor, that factor has already been priced in.
Retail investors buy facts, institutions buy expectations.
A rate cut doesn't necessarily mean an increase, and a rate hike doesn't necessarily mean a decrease.
The market is always a step ahead of what you think.
The liquidation of 100,000 people is not because they judged incorrectly on whether the 'Federal Reserve will cut rates'.
It's because they don't know: the rate cut has already been priced in, the real risk lies in Japan.
The next key time point: December 18, Bank of Japan meeting.
Don't rush to catch the bottom!!
Remember this lesson: the crypto market is not about events, it's about expectations.
