Let’s analyze the logic behind the rise and fall of the cryptocurrency market this week.

Although the market crashed unexpectedly due to Trump's recent announcement, the market is likely to regard the interest rate cut at 2 a.m. on Thursday as a positive event. The price of the currency soared before the interest rate cut meeting, from 52,000 to more than 60,000. According to this logic, Bitcoin will continue to rise in the next few days, and then when the interest rate cut is announced in the early hours of Thursday morning, the good news will be exhausted, and a small correction will begin.

However, the above is normal, because there is a very big uncertainty this time, that is, whether the interest rate will be cut by 25 or 50 basis points. If the result is 0.25%, instead of the 0.5% that everyone expects, then the market will most likely usher in a wave of declines.

After 2 a.m., you can tell whether the market is bullish or bearish!

The interest rate decision will be announced on Thursday this week, and the Bank of Japan’s interest rate decision will be announced on Friday. These decisions will affect the market trends at the macro level, so everyone must pay close attention when operating transactions.

Analysis of previous historical interest rate cut cycles:

2019 rate cut: It started in a slightly weaker economic environment, faced the risk of trade friction, and was affected by political pressure. At that time, Fed Chairman Powell was under pressure from Trump when making decisions. After the rate cut, growth slowed but did not fall into recession. The US stock market hit a new high after a brief decline of more than half a month after the rate cut.

The interest rate cut in 2007: It started at a time when credit risk events were frequent, which is different from the current situation. After the interest rate cut began, the real estate bubble burst, the subprime mortgage crisis, and the United States fell into recession.

The rate cut in 1995: At that time, inflation fell from a high level and the unemployment curve was flat, which is somewhat similar to the current situation. This time the economy had a soft landing and the stock market performed well.

Analysis of the FOMC meeting: There are differences within the Fed on the extent of the rate cut. The content of the FOMC meeting should be divided into three parts: the extent of the rate cut, the dot plot for 24 years, the unemployment rate forecast for 25 years, and the press conference. The focus should be on whether the Fed thinks the economy has problems. If the Fed wants to cut interest rates by 50BP, it must dispel expectations of recession.

The impact of the Fed’s rate cut on the crypto market

The Fed’s interest rate cut affects global financial markets, which of course includes the riskier crypto market.

The interest rate cuts in 2020 were the main driving force behind the last round of rapid growth in the crypto industry, as cheap liquidity and lower borrowing costs prompted investors to turn to riskier, high-growth assets. Then, in 2021, the crypto market also ushered in a new round of bull market. As shown in the figure below.

Therefore, many analysts also believe that Bitcoin may usher in a real new round of big market in 2025.

However, judging from the current macroeconomic environment, because there is no direct stimulus from black swan events such as COVID-19, the Fed’s interest rate cut this time is expected to be gradual and slow, rather than fierce and drastic, so most people predict that the first interest rate cut will be 25 bps or 50 bps.

Regarding this interest rate cut, I found that some institutions also have different opinions, such as:

- JPMorgan Chase expects a 50 bps rate cut

- Morgan Stanley expects a 25 bps rate cut (potentially a total of 75 bps by end-2024)

- Bank of America expects a 25 bps rate cut

From a comprehensive comparison, we can also find that there are some differences between the interest rate cuts in 2020 and this year:

The first is the concern about inflation. The interest rate cut in 2020 was mainly due to the outbreak of the epidemic, but this year's interest rate cut and inflation are the key core issues, and this issue will make the Federal Reserve more cautious in specific operations.

Secondly, in terms of starting interest rates, compared to the less than 2% interest rate in 2020 (which was close to zero after two rate cuts), the current interest rate (5.25% – 5.50%) is much higher.

The third is the pace of interest rate cuts. It is expected that the interest rate cuts starting this year will most likely be gradual, which is different from the drastic interest rate cuts taken in 2020 in response to the epidemic.

Therefore, we believe that this rate cut will definitely be good for Bitcoin and the entire crypto market in the long run, but the impact may not be as great as the rate cut in 2020. The rate cut in 2020 occurred under special circumstances, and we are unlikely to see a repeat of the script that directly triggered a large-scale bull market with this year's rate cut. In addition to the factors of the rate cut itself, the crypto market has also had some problems that it needs to face after two years of development (such as a large number of new projects that will further dilute liquidity).

But no matter what, we still say that the crypto market in 2025 is still worth looking forward to, and we will always remain optimistic about the long-term development of the crypto field. We just need to hold on to the cake in our hands and continue to be patient.

Inventory of MEME coins listed on BN in this cycle:

Solona Ecosystem: Bonk, WIF, BOME

Ethereum ecosystem: PEPE, Floki, meme, Turbo, Babydoge, Neiro

BTC Ecosystem: ORDI, SATS

TON Ecosystem: Banana, DOGS, CATI, NMSTR

Today, bn announced the listing of 3 MEME coins: TURBO, Babydoge, and Neiro

These three MEME coins all come from the Ethereum ecosystem, among which Babydoge is issued by the Ethereum and bnb dual chains and is an old coin from the previous cycle.

Turbo and Neiro are both new coins generated in this cycle.

Neiro has surged 20 times in two days and is the meme with the smallest market value on bn. First, the uppercase dog contract fud and lowercase dog were listed to collect chips, and then the lowercase dog was listed to pull the market to make bn rich. bn indicated that in the future, it will focus on listing memes with small market value and dispersed chips. Memes are the main line of this bull market.

Although the development of the Ethereum ecosystem has not seen much improvement in this cycle, it has passed the spot ETF, which is a reliable channel for capital inflow. In the second half of this bull market, ETH is expected to explode. After all, the Ethereum ecosystem had a very good MEME coin player circle and NFT player circle in the last cycle.

When interest rates start to cut, new funds will flow into the market, but if there is no cut, the currency price may plunge in the short term, so pay attention to the risks!