A recent interesting phenomenon has emerged in the market: Bitcoin's 24-hour net outflow reached 700 coins, while the Federal Reserve's rate cut expectations have significantly increased. This combination is rare in history — the last time these two signals appeared simultaneously was in March 2020.

What happened back then? Bitcoin surged from $3,800 to $64,800, with a total increase of nearly 16 times during that cycle. Now, a similar market environment is reappearing, which is indeed worth paying close attention to.

So, what does the expectation of a rate cut really mean for Bitcoin?

From a fundamental perspective, a reduction in the federal funds rate directly impacts the relative value of the dollar. When a rate cut cycle begins, the dollar faces increased depreciation pressure, prompting funds to flow out of low-yield bonds and bank deposits in search of higher returns. As a scarce asset with a fixed supply of 21 million coins, Bitcoin typically performs well during this period.

Data supports this view. In 2019, when the Fed started cutting rates, Bitcoin's annual increase exceeded 300%. In 2020, with even larger rate cuts, Bitcoin's gains surpassed 500%. This is not a coincidence but a systemic performance of risk assets in a liquidity-rich environment.

More importantly, the current policy expectations are strong. According to CME data, the market generally expects the Fed to cut rates at least twice by 2026, with some institutions even predicting a restart of quantitative easing. This means that in the coming year or so, the scale of new liquidity could be quite substantial.

Coupled with the net outflow of 700 coins, it reflects that large holders are beginning to accumulate positions at the current price levels. Once these two signals appear together, they often indicate that a larger price movement is about to unfold. Whether to seize this opportunity depends heavily on how deep your understanding of these fundamentals is.