There is a classic saying on Wall Street: "Don't fight the Fed." Recently, the statements from New York Fed President Williams have added weight to this phrase. He was frank, saying there are no plans to cut interest rates quickly, and the recent improvement in inflation data might be somewhat misleading. Once this was said, the market's enthusiasm for rate cuts next spring instantly faded.

The US dollar index has held firm, and Bitcoin, at the critical level of $86,000, is breathing more heavily.

As liquidity recedes, can the story still go on?

What does the Fed's shift to a more hawkish stance mean for our market? Numbers speak most directly. Recently, Bitcoin's price movements have shown a clear inverse relationship with the Fed's interest rate policies. More intriguingly, its correlation with the Nasdaq has been strengthening, approaching historical highs. This indicates a problem: Bitcoin is increasingly resembling a highly volatile tech growth stock. The once widely touted "digital gold" safe-haven story is starting to falter in the face of real market shocks.

This was evident in last month's market. When geopolitical risks suddenly spiked, gold surged sharply, while Bitcoin, along with risk assets, declined. The underlying logic is simple: by keeping interest rates high, the Fed makes assets like government bonds that offer stable yields more attractive, while Bitcoin—an "alternative asset" that doesn't generate cash flow or pay interest—loses appeal.

This time, the pressure isn't just one factor; how did it become the trigger for a correction?

My feeling is that this correction is entirely different from past retail-driven, emotional sell-offs—it’s a multi-dimensional pressure coming from multiple sources. First, the Fed's attitude has shifted; second, there are looming regulatory expectations overhead. The combined pressures are putting liquidity under real test.