Previously, we talked about the issue of the 'copycat season', which is mainly due to the exponential growth of cryptocurrency in recent years, leading to the dispersion of funds and a lack of innovation. Therefore, it is basically unlikely to see a situation of widespread soaring like in the past; we may witness structural and localized valuable increases in the future.
Now let's discuss the expectations for interest rate cuts; the viewpoint remains unchanged.
Do not think that cutting interest rates equates to a massive influx of liquidity or continued soaring. We need to consider from where the interest rates start to be cut and the intensity of the cuts, as well as the range in which long-term interest rates are maintained.
The previous view was that high-interest rates would remain for a long period between 3-4%. Currently, the adjustment from above 5% is just to prevent the economy from entering a recession. Note that this interest rate cut is preventive, not a way to continue printing money to impact the market.
For those willing to deposit money in banks, interest rates of 3%-5% are considered high.
Significant interest rate cuts generally only occur during market downturns, when stock prices and real estate values continuously decline, causing a loss of confidence, at which point regulatory measures to inject liquidity into the market will be initiated.
We have not seen the global market rise for two years, maintaining high market values while also opening the floodgates for liquidity.
If liquidity is injected at high levels, two problems will arise:
1. High inflation will return;
2. When a true crisis, collapse, or downturn occurs, what can be done to save it? Continue printing money on a larger scale? This is certainly unreliable, and will only lead to credit collapse, currency devaluation, and persistently higher inflation.
A moderate interest rate cut to prevent economic issues is reasonable.
Thus, at this stage, cutting interest rates does not equal a massive influx of liquidity; it is merely appropriate regulatory measures, and long-term high-interest rates will still be maintained.
Finally, a brief summary of the 'copycat season' and interest rate cut logic
The dispersion and lack of innovation in the cryptocurrency market: As the number of cryptocurrencies increases, the dispersion of funds will indeed affect the overall market performance. Future increases may be structural and localized, rather than a comprehensive surge.
Expectations for interest rate cuts: Cutting interest rates does not equal a massive influx of liquidity; this point is very important. The purpose of cutting rates is to prevent economic recession, not to stimulate the market. Appropriate interest rate cuts in a high-interest environment are aimed at preventing excessive economic tightening, not to trigger a new round of inflation.