$BNB $BTC $ETH Why do expectations of the Federal Reserve cutting interest rates lead to a market crash?
On December 18, the probability of the Federal Reserve cutting interest rates is as high as 95%, which is a common prediction on Wall Street. However, not only has the cryptocurrency market seen declines in BTC, ETH, and BNB, but many altcoins have even plummeted, and U.S. stock indices have also suffered, with the Dow Jones Index setting a record for the longest consecutive decline since 1978. This phenomenon has sparked widespread attention and discussion in the market.
Although expectations for interest rate cuts are high, this information has long been "priced in" by the market, meaning that current prices already reflect this expectation. As a result, the market focus has shifted from the rate cut in December to the interest rate direction in 2025, with particular attention on the Federal Reserve's dot plot and Chairman Powell's speech tonight. Currently, the market generally expects the Federal Reserve to take a more hawkish stance, leading some risk assets to see early withdrawals of funds to avoid uncertainty.
