The United States will cut interest rates for the first time in 2025! When will the new bull run in the crypto world come?

The long-awaited shoe has finally dropped in the global financial markets. On September 17, Eastern Time, the Federal Reserve (Fed) announced its first rate cut for 2025, reducing the target range for the federal funds rate by 25 basis points to 4.00%–4.25%. This marks the first rate cut by the Fed since last December.

From the perspective of macroeconomic theory, a rate cut usually signifies the opening of liquidity gates, heralding a carnival of risk assets. However, the market's reaction is far from simple "a wave of jubilation." The price of Bitcoin experienced a rollercoaster ride after the announcement, briefly spiking before quickly retreating, with fierce battles between bulls and bears leading to nearly $35 million in contract positions being liquidated, the majority of which were long positions.

Why did this seemingly "expected" interest rate cut trigger a violent market reaction and cold reflection? Is it the "starting gun" for a new round of bull market, or the beginning of a more complex game? When will the next wave of the cryptocurrency bull run arrive?

hawkish rate cut

Although the decision to cut the interest rate by 25 basis points itself met the market's general expectations, Federal Reserve Chair Jerome Powell's remarks at the subsequent press conference revealed a strong sense of caution, which was even interpreted by the market as a "hawkish" tone.

Powell emphasized that this rate cut is not the beginning of a sustained easing cycle, but rather a "risk management" or "defensive" cut. The main motivation is to address the increasingly weak employment market data and to prevent a deeper economic recession, rather than to declare a comprehensive victory in the fight against inflation. He made it clear that inflationary pressures still exist, so there is no need for a rapid and significant adjustment of the Intrerest Rate, and a more aggressive 50 basis point rate cut proposal "has not gained widespread support."

This "toothpaste" style of interest rate cuts has doused a bucket of cold water on the originally hot market expectations. The market was originally looking for a clear and sustained easing signal, but what it received was an ambiguous response that retains all future policy flexibility. This directly led to a brief frenzy in risk assets quickly cooling down afterwards. The price of Bitcoin fluctuated sharply around $115,000, while Ethereum hovered around $4,600, ultimately showing almost no change in price. This indicates that the market had already "priced in" the interest rate cuts themselves, and Powell's cautious attitude became a key factor in suppressing further fermentation of market sentiment.

Trump "Assassin"

More intriguing than Powell's speech is the profound divergence within the Fed revealed by the interest rate dot plot published at this meeting.

Although the median of the dot plot shows that most officials expect two more rate cuts within the year, this seems to be a dovish signal. However, the voting details reveal an internal tug-of-war within the decision-making body. In the 11 to 1 vote, there was a lone dissenting vote, and this dissenting committee member advocated for a more aggressive, one-time cut of 50 basis points.

Wall Street generally believes that this "lone warrior" is Stephen I. Miran, the White House economic advisor whom President Trump recently appointed to the Federal Reserve. Miran is nicknamed the "assassin" sent by Trump to the Fed, with the mission of pushing for faster and larger rate cuts to stimulate the economy. On the dot plot, there was even an extreme prediction point advocating for a one-time rate cut of 125 basis points, which the market largely attributes to Miran.

This series of phenomena has once again put the Fed's individuality issues in the spotlight. Trump has consistently criticized Powell for being too slow to cut interest rates and has influenced Fed decisions through personnel appointments. Milan's radical stance is seen as a direct projection of the White House's political intentions within the Fed. Although Powell repeatedly emphasized at the press conference that "the Fed makes decisions based on data, not government directives," and fiercely defends its individuality, this open divergence undoubtedly adds significant uncertainty to the future path of monetary policy.

For investors, this means that interpreting the Federal Reserve's signals has become more difficult. The median of the dot plot may be distorted, and political noise has indeed interfered with pure economic data analysis.

Interest Rate Cut Cycle

To predict the future, we must look back at history. Reviewing the several rate cut cycles of the Federal Reserve over the past 30 years, it can be found that not every rate cut can immediately ignite a bull market. The effects completely depend on the context and type of rate cut: In 1995, "preventive rate cut": At that time, the economy was robust, and to prevent overheating, the Fed slightly lowered rates by 75 basis points. The result was remarkable, as the U.S. economy successfully achieved a "soft landing" and initiated a five-year internet bull market. In 2007, "bailout rate cut": On the eve of the subprime crisis, the Fed began to cut rates, but it was too late. After a brief market surge, an epic financial tsunami hit, and asset prices experienced a devastating decline before rebounding in a more aggressive rescue effort. In 2020, "panic rate cut": In response to the "black swan" of the COVID-19 pandemic, the Fed lowered interest rates to zero within 10 days and initiated "unlimited quantitative easing" (QE). This unprecedented flood of liquidity directly led to a V-shaped reversal in global asset prices, including Bitcoin, and a super bull market.

So, which script does this rate cut in 2025 resemble more? From the economic data, it is currently closer to the "preemptive rate cut" of 1995. The unemployment rate is not high, the economy is still growing, and inflation has retreated from its peak. This seems to foreshadow a "rational prosperity" about to arrive.

When will the bull market come?

Despite a somewhat bumpy start, the optimism in the market remains strong. The bulls believe that the fuel for the bull market is ready, just waiting to be ignited. Liquidity Driven: The core logic of interest rate cuts remains unchanged. As interest rates decline, the attractiveness of fixed-income assets such as savings and bonds weakens. According to statistics, currently up to $7.4 trillion is parked in money market funds, and interest rate cuts will drive this massive amount of funds to seek higher returns, with hard assets like Bitcoin and high-risk tech stocks being the main beneficiaries. Historical Cycle Law: From Bitcoin's own cycle perspective, bull market peaks usually occur about 20 months after the "halving". The halving in April 2024 means that the peak of this cycle may occur at the end of 2025. The current interest rate cuts perfectly provide a macro catalyst for this final wave of "融涨"行情. Weak Dollar Expectations: Some macro strategists point out that the dollar index (DXY) is showing signs of breaking below a 14-year support level. The continued weakening of the dollar will directly push up the prices of dollar-denominated assets (such as gold and Bitcoin). Wall Street's Collective Bullishness: The market is in the final parabolic rise phase of a bull market that began at the end of 2022, and factors such as interest rate cuts, ETF fund inflows, and a weakening dollar will bring a spectacular rise by the end of the year.

The market has always been a game of bulls and bears, and this time the bears are more cautious: The collapse after the "integration surge": Some analysts warn that the current bubble led by AI and tech stocks, stimulated by interest rate cuts, may witness a final frenzy similar to that before the bursting of the 1999 internet bubble, followed by an epic collapse comparable to the Great Depression of 1929 in early 2026. Powell's hawkish shackles: As long as Powell continues to emphasize inflation risks, the pace of the Fed's interest rate cuts will be slow and hesitant. This type of "dancing with shackles" easing is unlikely to create the kind of sweeping capital flow seen in 2020. The shadow of economic recession: Signs such as a record high in student loan default rates and a weak real estate market indicate that the real economy is rapidly cooling. The disconnect between the financial market's frenzy and the real economy will ultimately be difficult to sustain.

Overall, the first interest rate cut in 2025 did not become a clear and loud "starting gun" for a bull market as many had hoped. It resembles more of a halftime whistle in a grand performance, signaling that the game has entered a more complex and unpredictable second half.

In the long run, the general direction of global monetary policy shifting from tight to loose is certain. As the Intrerest Rate gradually declines, liquidity overflow will be an inevitable result, which is undoubtedly a structural long-term benefit for the cryptocurrency market. However, the road to a bull market is destined to be bumpy.

Powell's caution, the political maneuvering within the Federal Reserve, and concerns about a future economic recession will all serve as bumps and obstacles on the market's path forward. Investors need to adapt to a new paradigm: the market's rise will no longer be the reckless charge driven by "unlimited QE" as seen in 2020, but is more likely to be a rational prosperity characterized by a spiral of progress with steps forward and steps back amidst noise and divergence.

So, when will the new bull market truly arrive? Perhaps it can be understood this way: the logical foundation for the bull market has been established, but its actual "time window" for takeoff depends on when the market can completely digest the current hawkish rhetoric and see the Fed take more decisive and continuous easing actions.

According to the guidance of the dot plot, the two interest rate meetings in the coming months will be key observation points. If interest rates are lowered as expected in October and December, market confidence will be greatly strengthened, and we may finally usher in the next major uptrend belonging to the crypto world. Before that, market participants need to maintain patience amidst the noise, discern the distractions, and prepare their sails for the upcoming Age of Exploration.

#The Federal Reserve Resumes Rate Cuts