The Fed's rate cut has landed! Powell has released a key signal, how should the crypto world interpret it?

The Fed's interest rate meeting concluded in the early morning, with the first rate cut in 2025 officially implemented—a reduction of 25 basis points, bringing the adjusted rate range to 4.00%-4.25%. From the market reaction, this action basically aligns with previous expectations and did not result in any unexpected volatility, as the market had already digested this policy direction in advance.

The core focus of this meeting is centered on Fed Chairman Powell's statements. He clearly pointed out that current inflation control has achieved phased results, and the policy focus will lean more towards the employment market; at the same time, he emphasized that the Fed will not adopt an aggressive rate-cutting strategy of "continuous sharp cuts," and future policies will continue to maintain a steady and neutral tone. This statement directly shatters the market's illusion of "continuous violent rate cuts" and sets a "stability" theme for the future policy path.

It is worth noting that the internal divergence within the Fed regarding the policy path has become more apparent. Among the 19 officials attending the meeting, there is a clear division in policy proposals: some officials believe that interest rate cuts should be paused this year, some support only one rate cut, while 9 officials advocate for a total of 3 rate cuts within the year, and one "hawkish" official even proposed a significant rate cut of 150 basis points this year. This divergence reflects the inconsistency within the Fed regarding the current economic outlook.

From an economic outlook perspective, the Fed has raised its GDP growth forecast for the next three years, which is more optimistic compared to the June forecast, indicating an increasing confidence in achieving a "soft landing" for the U.S. economy.

For the crypto world, the impact of this interest rate cut should be viewed rationally from both short-term and long-term dimensions:

- Short term: The positive effects have already been realized, and it is difficult to see a "stunning rally." The 25 basis point rate cut has already been priced in by the market, and after the policy is implemented, it is unlikely to bring a sudden and significant boost to the market. In the short term, the crypto world is likely to maintain a fluctuating pattern.
- Mid-term: The pace slows down, bidding farewell to the "super loose expectations." Powell emphasized that this rate cut is a "risk management operation" rather than a new round of "flood irrigation," which means that in the short term, the crypto world is unlikely to receive support from ultra-loose liquidity, making it difficult for the market to sustain a one-sided upward momentum.
- Long-term: Policy shift is set, favorable for asset prices. As the Fed's policy focus shifts towards employment and economic stability, and the tone of "neutral and steady" is clear, the future liquidity environment will gradually shift towards being favorable for risk assets, providing a relatively loose policy environment for the medium to long-term development of the crypto world.

Overall, we should not simply equate "interest rate cuts" with "immediate bull markets". However, the signals released from this meeting are already quite clear - the shift in the Fed's policy focus is a long-term positive signal for risk assets, including the crypto world. It is expected that in the coming months, the volatility in the crypto world will further increase, and market trends will rely more on changes in capital expectations and the driving logic of market narratives. We need to be cautious of the risks brought by short-term emotional fluctuations, while also seizing the opportunities arising from the medium- and long-term policy shift.