Why do markets tend to fall before rising after a rate cut?
In the cryptocurrency market, price movements tend to fluctuate around the formation and collapse of consensus.
When it is generally expected that a rate cut will immediately trigger a price increase, the market tends to unexpectedly fall first, which can be verified by the market reaction after historical rate cuts.
After exiting the market, smart money managers do not immediately re-enter the market to push up prices. Instead, they are more likely to wait for the market to have an opportunity to break through a key support level, and such a pullback provides them with a more favorable entry point.
Therefore, the initial decline in the market after the rate cut is likely to attract these smart money to return, thereby laying the foundation for the subsequent rise.
