2026-01-05 21:22:04

Loose cycles are coming again. The Federal Reserve has opened the door to interest rate cuts, and historical patterns tell us that this often becomes the stage for crypto assets to perform. But for most retail investors, opportunities and traps are like two sides of the same coin—one misstep can lead to a reversal.

**Why does Ethereum outperform with bigger gains?**

Looking back at data from the past few years reveals the answer. During the three Fed rate-cutting cycles in 2019, 2020, and 2024, Ethereum's performance outpaced Bitcoin. The most straightforward example is the wave in September last year—after the Fed cut rates by 50 basis points, ETH rose by 16.3% within a week, while BTC only gained 9.7%. Why? On one hand, the dollar depreciated, making cryptocurrencies more attractive as an inflation hedge; on the other hand, the launch of spot ETFs and the booming staking ecosystem are continuously attracting institutional funds. According to current expectations, there are three more rate cuts lined up in 2026. If the total cut exceeds 50 basis points for the year, Ethereum could surge to the $4,000–$6,000 range in the next 6 to 12 months. Sounds tempting, right? But don’t forget one detail—the policy expectations have already been priced in. If the Fed isn’t as "generous" as expected, a correction could come quickly.

**Common pitfalls for retail investors**

At this stage, the most popular strategies involve two main traps. The first is high leverage. As borrowing costs decrease, retail investors tend to leverage up as if they’ve been injected with chicken blood. Little do they know, professional institutions are already ready to harvest these "liquidity" providers. The second, more covert trap is blindly chasing small-cap coins. Capital rotation usually goes like this: first into BTC and ETH, and once the main rally is nearly over, funds flood into altcoins. If you jump into an unknown token too early, you might miss the main rally altogether and end up trapped. Plus, with regulatory risks constantly looming like a black swan, no one knows when it might strike.

**What to do?**

Simply put: control your position size, follow the footsteps of big funds, and don’t expect to get rich overnight. Rate-cutting cycles are indeed opportunities, but only if you survive long enough.

ETH0,7%

BTC0,08%

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gas_fee_therapist

· 01-08 21:19

ETH is stable this time, the leveraged traders are probably going to be liquidated again...

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Layer2Observer

· 01-07 05:25

The data is correct, but it's interesting to say that the expectations are absorbed. The problem is, how do retail investors know when institutions are already saturated? It's very difficult to catch this point, right?

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NotFinancialAdvice

· 01-06 08:39

ETH is really popular, but I've seen too many stories of leverage liquidations. Those guys all think they are the chosen ones. Following the trend of altcoins usually results in being a leek, getting caught before the main upward wave even arrives. I'm not daring to heavily invest even with the rate cut coming; it feels like the good news has already been priced in. Maybe this time will be different. 4000 to 6000? Sounds great, but policy expectations can reverse at any time—it's a bloody lesson. Living longer is much more important than making quick money. It's a well-known truth, but it really works. Leverage is just a cash machine for institutions; retail investors should stay away.

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Tokenomics911

· 01-05 21:50

Coming up with this again? If historical patterns were reliable, no one would get liquidated. Instead of studying rate cuts, I'd rather focus on how to survive and exit the market.

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GateUser-1a2ed0b9

· 01-05 21:48

ETH has indeed performed strongly during previous rate-cutting cycles, but can it really reach 4000-6000 this time? It feels a bit optimistic. The high leverage part hit the nail on the head; too many people around me have been liquidated. I've given up on small-cap coins; it's too easy to be caught holding the bag. Living long enough is the phrase that saved me.

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HorizonHunter

· 01-05 21:46

Here we go again with this set; the policy expectations have already been priced in, the real harvest is still to come.

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RebaseVictim

· 01-05 21:42

Here we go again with this routine, as soon as leverage is activated, institutions start to harvest retail investors, old trick.

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SchroedingerMiner

· 01-05 21:31

Here we go again, every time there's a rate cut, people say ETH is about to explode. And what happened? The policy expectations were already priced in. This statement is so true. --- I've seen too many cases of high leverage. Friends around me have been liquidated one after another, really. --- Honestly, it's just waiting. Waiting for institutions to be full, then we follow. It's not that complicated. --- $4000 to $6000? Sounds good, but I trust the speed of the pullback more, haha. --- Blindly chasing altcoins is the easiest mistake for beginners. I used to do it too. Now I only watch BTC and ETH. --- The advice to control your position size is really worth repeating. Living longer is much more important than making quick profits. --- It's always like this. Retail investors jump in when it's already too late, and institutions just smile silently. --- The question is, who can really tell if this is an opportunity or a trap? It all feels like gambling.

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TokenTherapist

· 01-05 21:26

Here comes that same old narrative about interest rate cuts and good news... Sounds nice, but isn't this just asking us to take the fall? The part about high leverage really hit home; so many people around me got wiped out just like that. ETH hitting 4000-6000? Alright, I'll just watch. Anyway, I've already learned to control my positions. The most terrifying part is the regulatory black swan; no one knows when it will come. Forget it, better to stay steady with big funds and stop dreaming about getting rich overnight.

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