The Federal Reserve just announced a 25 basis point rate cut, bringing the benchmark interest rate to 3.50%-3.75%. This is the third rate cut this year, with a total reduction of 75 basis points so far. In simple terms, the "rent" for the US dollar is becoming cheaper, and market liquidity is accelerating its release.

What does this mean for the crypto market? Rate cuts essentially increase the money supply. When yields on US Treasuries and deposits decline, funds naturally seek higher-yielding investment targets. Crypto assets, with their high volatility and high returns, often benefit from liquidity spillover.

Looking back at the rate cut cycle in 2020, BTC rose from a few thousand dollars to nearly $60,000, with altcoins experiencing a significant surge overall. After the first rate cut this year, ETH and the MEME sector also saw noticeable upward movements. However, it’s important to be cautious—rate cuts sometimes reflect underlying economic issues. If the economy shows signs of recession, the crypto market won’t be immune. The 2008 crisis saw crypto assets dropping over 30%, serving as a warning.

In the short term, this rate cut will boost market sentiment and attract capital. But for the long term, we need to closely watch US economic data. Currently, the crypto market is driven by policy, capital, and sentiment factors. The Fed’s move provides a good entry signal for bullish traders.