June’s major events still depend on the Federal Reserve’s rate-cut meeting on June 18—so why did Bitcoin plunge? Does a rate cut mean it goes up, or does a rate hike mean it goes down?

Federal Reserve Waller said “balance sheet reduction + rate cut,” but it didn’t go as planned, and they got hit with a sudden warning. What’s going on? Simply put: the US dollar’s scythe has gone dull.

First, understand the Fed’s two major moves: quantity (balance sheet reduction/expansion—like how much water is in a reservoir) and price (rate hikes/cuts—like the price of water). In the past, this strategy worked smoothly. If they wanted to harvest, they would raise rates to make water more expensive, pulling global capital back. If they wanted to protect themselves, they would cut rates and expand the balance sheet to release water.

But now it’s weird: on one hand, the Fed is reducing the balance sheet (draining water); on the other, it’s cutting rates (lowering the water’s price). They’re pressing the accelerator and the brake at the same time—how is the car supposed to move? How is the scythe supposed to swing?

Why is it so tangled? Because the United States owes 40 trillion! In the past, even a 20% interest rate was fine—back then, debt was only a few trillion. Now the scale is too large; if they raise rates, they would explode first. But if they don’t raise rates, they can’t control inflation either. So they roll over short-term US Treasuries, waiting to cut rates later and then switch to long-term bonds—good math, but the market isn’t buying it.

Even worse is this:
1. Lack of internal unity: Silicon Valley’s AI hype has created trillions in market value—everyone plays their own game, and Wall Street can’t control it. If the Fed can’t even control the US stock market, how could they control the whole world?

2. Trading away reality for illusion: If banks can earn 3.65% “risk-free” returns by holding the Federal Reserve’s instruments, who would still lend to real businesses? A comeback of manufacturing? That’s a dream.

So the scythe has gone dull because it’s self-inflicted. As for the future? The Fed is being pushed to expand the balance sheet + cut rates—flooding the market, with inflation. After the midterm elections, they’ll manage whether they care about what happens to you. $BTC $SOL