If, in 2021, there was a cottage season because of the interest rate cut.

Then, in 2017, there was a cottage season because of the interest rate hike?

It seems that there is something wrong with this reason, right?

Why does a big bull market have a cottage season?

What is the cause?

But in fact, there was no interest rate cut in 2021. The interest rate cut happened from 2019 to 2020. The interest rate cut started in June 2019 and lasted until April 2020. The reason why the interest rate cut was fast this time was due to two reasons. One was that the interest rate was very low this time, only 2.5%, so it only took 10 months to get the interest rate back to 0.25%. But if it was more than 5%, it would take longer. Another reason was the damage caused by the COVID-19 pandemic. In fact, this interest rate cut was more like a defensive interest rate cut in terms of results. The end of the interest rate cut immediately ushered in a massive unemployment outbreak and economic recession.

In addition, during the interest rate cut, the price of#BTCwas in a relatively low range, with an average price of less than $8,000 at the time. In fact, it was not just BTC, but also the S&P 500 that fell during the interest rate cut. Then, the outbreak of the epidemic led to a comprehensive collapse of the economy and unemployment. At that time, BTC had little impact, but the impact of US stocks was very large.

The full recovery of the prices of US stocks and BTC actually started in September 2020, which happened to be two months before the US election. This is also a well-known law in history, that is, the mid-term election and the two months before the election, the latter two months are often favorable to the risk market. The more severe the fall before the mid-term election and the election, the better the market will rise after the two elections. The main reason is that both parties will try every means to release more liquidity for the election.

At the same time, more importantly, the 2020 election is a very good time, because it is the year of "post-disaster reconstruction". In order to cope with the new crown epidemic, the Federal Reserve has unprecedentedly released water, and it is also very famous for directly sending cash to every citizen. It has driven not only the United States, but even Europe. Many countries in Asia have followed suit. Hong Kong and Macau have issued a lot of cash, not in the form of subsidies to enterprises, but directly to people, which laid the foundation for the bull market in 2021.

Coincidentally, the 2020 halving was on May 11, 2020, and the corresponding start time was 5 months after the halving, which is also in line with what is often said in the currency circle, that the halving will start half a year to a year after the halving, so the main reason for the cottage season is not because of the interest rate cut. The interest rate cut itself will not release too much liquidity, but after the interest rate cut, it will be "post-disaster reconstruction". Often at this time, the Federal Reserve will release a large amount of liquidity to stimulate the market in order to quickly recover the economy.

Finally, let's talk about 2017. In 2017, there was indeed a climax of rising during the interest rate hike. Not only BTC, but also S&P rose. In fact, if you look closely, you can know that interest rate hikes often fall first and then rise. Looking at the interest rate hike that started in 2021, you can see that in 2022, it fell for a year and fell to the end of the first stage of the interest rate hike, that is, December 2022. When the second stage of interest rate hikes started in January 2022, the market began to rise, and the climax of the rise in 2017 actually corresponded to the suspension of interest rate hikes rather than interest rate hikes.

In the end, the ups and downs of the market are mainly caused by liquidity, but liquidity is not 100% the only reason. The risk market is never as simple as 1+1=2 and 1-1=0. There is often a strong game, but for the trend, interest rate hikes often mean the beginning of bad news, and a pause in interest rate hikes is often a good expectation. Interest rate cuts begin to bring damage, and liquidity increases after interest rate cuts. This is a big trend. There may be different structures in the middle, but the results are often inevitable, so there is nothing wrong. Everything is the interpretation of historical laws. The difference is that the scripts are different, but the endings are the same.

Liquidity is the reason for the formation of a bull market. There is a cottage season when there is liquidity. It's actually that simple.