Recently, there's been a new hype in the community claiming that the Federal Reserve will cut interest rates. Once the faucet opens, the crypto market is expected to experience a full-blown explosion. It sounds quite tempting, but after thinking it through carefully, I realize that this kind of reasoning has more problems than it appears.

In simple terms, this is just the old framework of traditional finance—"macroeconomic liquidity determines the trend of risk assets"—rigidly transplanted into the crypto market, assuming that once policy shifts, capital dividends will automatically follow. Theoretically, it sounds plausible, but will the real market behave so obediently? Today, let's dissect the tricks behind this logic.

**Liquidity theory sounds beautiful, but reality often hits back**

When a rate-cut cycle begins, it indeed lowers the cost of funds, increasing idle cash. This money usually flows into high-risk, high-reward areas. High-beta assets like Bitcoin naturally become key targets. After the Fed's massive liquidity injection in March 2020, Bitcoin indeed started to rise. This case is often cited as evidence, and the logic seems perfect.

Where's the problem? The expectation of liquidity and the actual flow of money are worlds apart. As of November 2025, the total market cap of stablecoins has exceeded $307 billion, and institutional ETF inflows have reached $14.8 billion. That sounds substantial. But most of this money is circulating within the ecosystem; large-scale new capital inflows simply haven't appeared. The market is currently in a "self-sustaining" phase, and the incremental funds are far less abundant than imagined.

**Positive news is priced in early, but actual implementation can become a negative**

The market's secret is always to digest expectations in advance. When everyone knows a rate cut is coming, prices tend to move in anticipation. When the policy is finally announced, it often triggers profit-taking and selling, even causing a wave of pullback. This logic applies to any asset class, and crypto markets tend to be even more exaggerated.

Blindly chasing the trend is always a 9-to-1 risk business. What's more dangerous than waiting for the wind to come is not understanding where the wind is actually blowing from.