Analysis of Federal Reserve Rate Cuts and Market Trends

The expectation of a rate cut by the Federal Reserve has warmed up, with the market generally betting on a 25 basis point cut this week, while the possibility of a 50 basis point cut also holds surprises. If the rate cut exceeds expectations, it will significantly boost market sentiment. A 25 basis point cut may lead to a moderate rise, while a 50 basis point cut could trigger short-term frenzy, pushing Bitcoin to break through the $120,000 mark again.

An interest rate cut typically means increased dollar liquidity, reducing the opportunity cost of holding non-yielding assets like Bitcoin. As "digital gold," Bitcoin may rise by 5%-10% in the short term due to a rebound in risk appetite, with Ethereum potentially following suit. Altcoin performance will vary, with high beta projects (such as SOL) possibly soaring by 15%-20%, while low-quality projects risk being marginalized.

In retrospect, during the pandemic in 2020, Bitcoin soared from $10,000 to $69,000 under the conditions of liquidity easing. If this rate cut is accompanied by dovish statements, a similar logic may re-emerge, starting a new round of increases. However, caution is needed: if the Federal Reserve hints at a short rate cut cycle, or if economic data worsens, the market may shift to a risk-averse sentiment, and Bitcoin may quickly pull back to support levels.

I tend to believe that this rate cut will be 25 basis points, temporarily pushing Bitcoin up to the range of $120,000 to $130,000, but altcoins have stronger explosive potential. In the long run, if the Federal Reserve continues to ease, Bitcoin may reach $150,000 to $200,000 by 2026. I recommend a light position, focusing on opportunities in altcoin rotation, while also being cautious of macro risks.

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