Countdown to the Federal Reserve's interest rate meeting: Understand why interest rate cuts stir the cryptocurrency community in one article.

With only three days left until the Federal Reserve's interest rate meeting, many friends are wondering: why can interest rate cuts directly affect the cryptocurrency market? The core logic is actually quite simple - it essentially involves the reconstruction of "capital flow": interest rate cuts will drive market funds to actively chase higher returns, and cryptocurrencies are an important alternative in the eyes of these funds.

Firstly, the interest rate cut has drastically reduced the attractiveness of "stable wealth management." Low-risk assets like bank deposits and government bonds primarily sell the core appeal of stable interest returns. However, as we enter a rate-cutting cycle, deposit rates and government bond yields will decline in tandem: originally, depositing 100 yuan could earn 3 yuan in interest in a year, but after the rate cut, it may only yield 1 yuan. The reality of "money lying idle is depreciating" will force investors to step out of their "stable comfort zone" and seek investment directions with higher returns.

Secondly, the "high risk, high return" nature of cryptocurrencies precisely meets the demand for funds. Although mainstream coins like Bitcoin and Ethereum are highly volatile, with the potential for short-term drops exceeding 10%, they also experience single-day surges of 20%, making them typical high-return targets. When the yields on low-risk assets continue to decline, those willing to take on risk in pursuit of excess returns will naturally turn to cryptocurrencies—similar to how investors who previously stuck with money market funds might take a portion of their idle funds to test the waters in the crypto space once yields drop below 2%, in hopes of capitalizing on market dividends.

Finally, the "market expectations" will amplify this effect. In the investment circle, expectations often take effect earlier than actual policies. Once the market reaches a consensus that "there will be continued interest rate cuts", investors will act early to "get ahead of the game": for example, if they anticipate two more rate cuts within half a year, they will buy cryptocurrencies in advance, waiting for subsequent funds to pour in and drive up prices. This proactive action allows the cryptocurrency market to potentially welcome a wave of upward momentum even before the interest rate cuts are implemented, or even when only rumors are circulating.

In the end, the logic chain of how interest rate cuts affect the cryptocurrency market is clear: interest rate cuts → decline in low-risk asset returns → funds seeking new outlets → some funds flowing into high-yield cryptocurrencies → driving up coin prices. #CPI数据来袭