On December 10th, the Federal Reserve's FOMC meeting concluded, and Powell's actions this time are quite interesting—an expected 25 basis point rate cut, bringing the rate range down to 3.5%-3.75%. But the focus is on what comes next: he directly stated that there might only be one rate cut in 2026, while suddenly announcing this month’s plan to purchase $40 billion worth of short-term government bonds.

This move caused a brief excitement in the crypto and US stock markets, but upon reflection, it may not be a good sign in the long run.

**First, let's discuss the hawkish side**

The latest Fed dot plot reveals their true attitude: officials expect only one rate cut in 2026, about 25 basis points. This is a stark contrast to the market’s previous hopes of "2-3 cuts." Powell’s words were even more direct: "Inflation is still hovering above 2%, and employment data is not bad, so there’s no need to implement overly loose policies."

In other words—don't expect liquidity to be loosened quickly.

This should serve as a warning to the crypto market. Over the past few months, Bitcoin and Ethereum’s rallies were largely supported by "rate cut expectations." Now that these expectations have been crushed by the Fed, what’s left? We might need to return to fundamental factors, such as sustained ETF inflows and on-chain ecosystems that are genuinely developing.

**What’s hidden behind the short-term rebound?**

The market did rally due to the rate cut and bond purchase news, but this kind of "positive news exhausted" phase is often the most dangerous. With hawkish expectations in place and liquidity expectations suppressed, investors trying to bottom-fish need to think clearly: Is this a true reversal, or just a trap?