The Federal Reserve announced a rate cut this week, and all voices are promoting the same logic: lower interest rates → cheaper money → liquidity flood → crypto surge. It seems perfect, but is it really that simple?

Currently, Bitcoin is fluctuating around $88,500. As an observer who has been navigating this market for years, I have to say: the Fed's rate cut is not a panacea. It’s more like a tool that needs to be used precisely; misusing it can backfire.

The key issue is that the market has already digested this rate cut. Looking at the inflows of BTC and ETH, there hasn't been the sudden, large increase many might expect. What are the truly smart players doing? They are studying how this round of rate cuts will reshape the DeFi lending ecosystem and how it will change the on-chain yield curve. That’s the next layer of the game.

**The signaling effect of rate cuts exceeds the action itself**

On September 17, the Fed chose to cut rates by 0.25%. Rather than seeing it as a quick rescue for the market, it’s more like a clear signal to the global markets: we are changing course. Numerically, 25 basis points may seem small, but it signifies the official start of an easing cycle, which triggers a chain reaction across global asset allocations. Stocks, bonds, forex, and crypto assets—none can remain unaffected.

The power of rate cuts comes from multiple dimensions: lowering short-term borrowing costs, changing market expectations, adjusting the bond yield curve, and consequently, banks’ lending rates. Risk assets suddenly become relatively attractive. But it’s also important to clarify what rate cuts cannot do: they cannot immediately lower fixed mortgage rates, solve supply-side price issues, or change the decisions of homebuyers scared by rising house prices.

Market reactions often reveal more than central bank actions. The true winners of this rate cut may not be where you first expect.