Have you heard? This time, the Fed is really about to take action.

Recently, there have been widespread rumors in the market about rate cuts, and this time it's not a false alarm—the data shows there's already an 89.2% probability of a 25-basis-point rate cut in December, basically making it a done deal. But the real bombshell is still to come: by January next year, the probability of at least one rate cut by the Fed is nearly 100%, and there’s even a one-in-four chance they’ll cut twice, slashing rates by 50 basis points.

**What’s the real reason behind this rate cut cycle?**

Don’t be fooled by the official line. On the surface, it’s about weakening employment data, but the deeper reason is that the financial system is experiencing a “cash crunch.” Several Fed officials have been sending signals recently, especially Hassett, the dovish candidate Trump might nominate. If he replaces Powell, the pace of rate cuts could be even more aggressive than most expect.

**But rate cuts are just the appetizer—the main course is a trillion-dollar bond-buying program**

The real headline is that the Fed is about to restart balance sheet expansion—in plain terms, printing money to buy bonds. Why is this necessary? Because the current shortfall in bank system reserves has reached $200-300 billion, well below the safe threshold. The Treasury's liquidity support just isn’t enough; only the Fed directly injecting liquidity can solve the problem.

The timeline is basically set:
- **December 2025**: First, halt balance sheet reduction to reassure the market
- **January–March 2026**: Officially begin net Treasury purchases, with an initial scale expected to be $50–100 billion per month

Of course, there isn’t complete consensus within the Fed. The Cleveland Fed President has publicly warned that excessive easing could plant the seeds of financial risk. Powell himself is still on the fence about action in December, and internal debates are quite intense.

**The market has already started partying in advance**

The policy hasn’t even been officially implemented, but all kinds of assets are already rallying:
- The three major U.S. stock indexes are climbing together
- Gold prices are soaring on expectations of easing
- The dollar is weakening, long-term interest rates are dropping, and the bond market has already entered “rate cut mode”

For the crypto market, this is practically a natural tailwind. History shows that every time the Fed injects massive liquidity, major coins like Bitcoin and Ethereum experience a strong rally. Especially now, with ETH whales continuing to accumulate and discussions about BTC strategic reserves in the U.S., market sentiment in crypto is already brewing for a new breakout.

But here’s a reminder: while the benefits of a policy shift are clear, timing is everything. If divisions within the Fed intensify, or if there’s a twist in Hassett’s nomination, there could be short-term volatility. Still, from a macro perspective, the return of liquidity is already a foregone conclusion—it’s up to you how to position yourself next.