Fragile Year-End Balance: Federal Reserve Rate Cuts, AI Bubble, and $2.8 Billion Exit from the Crypto Market

【Crypto World】The market is currently in a state that’s hard to describe — both bullish and bearish arguments have their merits.

The Federal Reserve is playing both sides, appearing quite dovish during rate cuts, but still taking inflation seriously in words and actions. The dot plot indicates that interest rates may stabilize, with market expectations of 2 to 3 rate cuts next year. On the surface, this is about releasing liquidity, but in reality, they are still scrutinizing the labor market.

The stock market is a key variable in this game. AI infrastructure is rapidly absorbing large amounts of capital, but the ability to monetize it hasn’t kept pace with investment enthusiasm, which creates an awkward situation. If revenue growth can’t keep up with the burn rate, the overheating risk of the entire AI sector could spill over into other assets, potentially leading to a broader valuation adjustment in the stock market by 2026.

The pressure on the cryptocurrency market is even more direct. An international index provider is reevaluating the inclusion criteria for digital asset management companies in its indices, which could lead to outflows of passive funds amounting to as much as $2.8 billion. That’s not a small number and could impact market sentiment.

The year-end market feels like walking a tightrope, with confidence and caution intertwined. Any unexpected event could shatter this fragile balance.