The Federal Reserve cut interest rates by 25 basis points this time, while simultaneously launching a $40 billion RMP purchase program.

Don’t rush to call it a bailout—many people reflexively think of QE whenever they see bond purchases. Actually, RMP and traditional quantitative easing are completely different. Simply put, RMP involves the central bank buying short-term bonds from banks, which is equivalent to crediting the banks’ reserve accounts at the Fed. This operation is more like giving the banking system a blood transfusion, and it’s a neutral monetary policy tool. Its spillover effects on the entire market are limited, but it can prevent black swan events like liquidity crises caused by profit shrinking in some banks.

The rate cut itself was within expectations; what’s truly worth paying attention to is the pace of future cuts over the next two years. The CME’s current dot plot indicates that in 2026 and 2027, there’s a high probability of two rate cuts each year, and the earliest possible move won’t be until April next year. This magnitude is directly cut in half and is far less aggressive than this year. Although Powell’s speech this time carried a somewhat moderate tone, the data is clear—the market no longer has high expectations for significant rate cuts over the next two years.

When liquidity expectations tighten, be cautious at high levels. After all, if cryptocurrency prices keep rising, what logic will support such a large market cap? Previously, it could have been justified with “hedging inflation,” but what if inflation really comes down in two years? At that point, the market might have to beg for inflation to return.

The BTC price action also confirms this—after surging, it clearly retreated. Once liquidity expectations turn sour, the impact on Bitcoin won’t be small. The 95k resistance level still hasn’t been broken through, which is indeed a bit disappointing.