#以太坊行情解读 Why does a rate cut sometimes lead to a market sell-off? Four pitfalls to avoid

"Interest rates are coming down, so why is BTC still dropping?"

Many people have been asking this question these days. My straightforward answer: who says a rate cut must always lead to a rise?

If it were that simple, the Federal Reserve Chair could just press a button at a meeting to solve poverty. Wake up.

The market is never looking at "whether there is a rate cut," but rather "whether the magnitude of the cut exceeds expectations." That’s the real key.

Today, let’s break down the four logical reasons behind this wave of "rate cut but market declines," so you can save this and avoid getting caught off guard next time.

**Good news was already fully priced in**

There’s an old saying in crypto: "Expectations to go long, reality to go short."

Two weeks before the rate cut, the futures market had already locked in a 100% probability. And what happened? BTC shot from $58,000 to $68,000, fully pricing in all the "rate cut benefits" in advance.

Once the official announcement came out, funds immediately started to flee, and the price suddenly plummeted. The key point isn’t whether there was a cut, but how much was cut and what the official statement said.

**The cut didn’t reach the "surprise line"**

In September’s rate cut, the Fed lowered rates by 25 basis points. This number matched most expectations.

But the problem was, before the market opened, 6% of aggressive traders were betting on a 50 basis point cut. Think about it—they were expecting a big rate cut, but only got half of that. Naturally, they had to sell off to cut losses.

This created bearish pressure, causing the bulls to be pushed out with long upper shadows on the candlesticks, with the biggest drop reaching 2%.

Market movements are driven by the "difference between expectations and reality," not simply "good news or bad news."

**The Fed Chair’s tone suddenly shifted**

After the rate cut was announced, the official stance changed abruptly.

In the press conference, the Chair explicitly said, "No decision has been made yet on whether to continue cutting in December," and also raised the long-term interest rate outlook. Suddenly, the dollar appreciated, bond yields soared, and the entire risk asset sector was hammered.

BTC, known for its volatility, fell even more sharply than Nasdaq, which makes perfect logical sense.

**Macro risks + capital flight**

Here’s an overlooked signal: sometimes, a rate cut indicates that the economy might be slowing down.

In this Fed statement, the phrase "robust economic growth" was directly removed and replaced with a more neutral wording. The market immediately interpreted this as "officials hinting at economic cooling," prompting funds to flow out of crypto into money market funds and short-term bonds.

Historical data shows that within 30 days of the first rate cut, BTC typically retraces about 12%. This current movement is entirely consistent with that pattern.

**Looking at the whole picture**

A rate cut isn’t some magic switch that automatically causes prices to surge. It’s just one piece of the macroeconomic puzzle.

The true direction of the market depends on "how big the expectation gap is."