The Fed's recent rate cut may truly be a timely rain for the crypto world.

**Liquidity expectations are warming, and that's the key**

The direct release of 25 basis points might not seem significant in numbers, but the signals behind it are what players truly care about. Once the Federal Reserve confirms a policy shift, market expectations begin to change—everyone is wondering if this means the interest rate environment will remain accommodative and borrowing will get easier? For assets like Bitcoin and Ethereum, which are highly sensitive to liquidity, this is like a spring breeze. Historically, at the start of each rate cut cycle, the crypto market often experiences a valuation lift, and this time is unlikely to be an exception.

**High-risk assets regain favor**

What is the most direct consequence of a rate cut? Holding risk-free assets becomes less profitable. Nobody wants to keep money in fixed deposits earning just a few percent; everyone starts looking for high-return opportunities. Assets like Bitcoin and Ethereum, with their high volatility, naturally come into the view of institutions and retail investors. Especially hedge funds and traditional financial players, who now have some idle cash, are more or less allocating some positions into the crypto market. This liquidity release could very well pull more incremental funds into the space.

**Powell's attitude determines the short-term trend**

But there's a trap here. After a rate cut, the market's biggest concern is what Powell will say. If he adopts a "dovish" stance this time, hinting at further room for rate cuts, the bulls can breathe easier, and the market could continue to rise. Conversely, if he emphasizes inflation pressures and remains cautious about cutting rates, the market might "price in expectations and sell the facts," causing a short-term pullback. This is what’s called a "policy expectation gap"—the market fears not bad news but good news not meeting expectations.

**Long-term bullish, short-term volatile**

Overall, this rate cut paves the way for long-term gains in crypto assets. Once the "accommodative" narrative is established, market sentiment will be strong. But don’t get too excited too early; in the short term, liquidity still needs to shift from expectations to actual fund inflows, and crypto market volatility won't disappear. The real trend will depend on ongoing traditional fund participation and further confirmation of liquidity improvement. Consider this as the prelude—the main act is still to come.