2025-12-11 03:21:13

Why do cryptocurrency prices tend to plummet every time interest rate cuts are implemented? Many people focus on the rate numbers themselves but overlook what the market truly cares about.

Let's start with the most direct aspect——the expectations have already been priced in. When the probability of a rate cut approaches 100%, smart money has long since positioned itself in advance. By the time the rate cut is actually announced, the move that should have gone up has already happened, and this is the classic moment of "good news fully priced in." Early investors take profits, and prices naturally come under pressure.

But the more critical point is: rate cuts ≠ liquidity infusion.

For risk assets like Bitcoin, the real fuel is liquidity—simply put, how much money is flowing in the market. Cutting interest rates alone, without accompanying balance sheet expansion (E0) to increase the Federal Reserve's assets and liabilities (E0), is just "reducing borrowing costs," but the total money supply doesn't increase. Historical data shows that in 2025, the Federal Reserve held seven policy meetings, and Bitcoin experienced corrections after six of them, with declines ranging from 6% to 29%. This is no longer coincidence but reflects a shift in the market response pattern.

Another factor that is easily underestimated: the Federal Reserve's "language."

Does the meeting statement hint at continued easing in 2026? Are there signals of adjustment to the balance sheet plans? These details influence market sentiment more than the actual "25 basis points cut." Hawkish rate cuts (E0) that imply future tightening (E0) could directly dampen the market; truly dovish signals (E0) that promise continuous liquidity injections (E0) are the real fire that drives prices through the breakthrough point.

So next time you see news of a rate cut, don't rush to shout "bull market is here." First, see how much the market has already priced in, and then listen carefully to what the Federal Reserve Chairman actually says—because the devil is always in the details.

BTC1,2%

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BackrowObserver

· 2025-12-13 17:15

It's the same pattern again. After the expected trade, they start dumping. The smart money has already left, and we're retail investors still catching the bag.

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SandwichVictim

· 2025-12-11 12:54

It's the same story again. I expect the price to plunge after the trade is completed; I've been numb about it for a while. The key is to see what the Fed says, not the numbers themselves.

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DegenRecoveryGroup

· 2025-12-11 03:48

The truth only comes after the trade is completed; many people are still sleepwalking.

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YieldFarmRefugee

· 2025-12-11 03:43

Damn, it's the same old story of "expecting the trade to be completed"... I guess I'm just that trapped retail investor. Cutting interest rates sounds great, but without liquidity, it's all for nothing—this is the most painful part. The Federal Reserve loves this trick; they say cutting rates actually tightens, playing word games, huh? Six meetings, six dives—these numbers make my scalp tingle. From your analysis, it seems that rate cuts are actually bearish for the crypto prices... Truly remarkable. There's definitely something fishy in the details, but how does an ordinary person figure it out? Next time, it still depends on whether there's action to expand the balance sheet; just cutting rates isn't enough, right? I just want to ask, is there still a chance to get in now, or should I just continue to buy the dip?

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FOMOmonster

· 2025-12-11 03:37

Here we go again, expecting to start cutting leeks right after the trade is finished—same old trick every time.

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ContractFreelancer

· 2025-12-11 03:26

Oops, it's the same old story. Smart money has already run away. Expecting a dump after the trade is completed, this script is the same every time. Cutting interest rates does not equal easing liquidity; this point has indeed been overlooked. Lowering rates alone is useless. Liquidity is the real key; the Fed not expanding its balance sheet is just fake easing. Six meetings, six rate cuts? Fine, the pattern has indeed changed. Listening to rhetoric is much more important than looking at numbers; hawkish rate cuts directly harm. Details are full of knives; if you don't listen carefully, you'll get cut. Once again, I was truly disappointed.

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