The Federal Reserve (FED) interest rate cut cycle fully reviewed! Historical data reveals the next trends for Bitcoin, U.S. stocks, and gold.

In the early hours of September 18, The Federal Reserve (FED) will announce its latest interest rate decision. The market generally expects a 25 basis point cut, lowering it from 4.5% to 4.25%, marking the first rate cut since last September. Historical experience tells us that a rate cut cycle often alters the rhythm of asset prices—sometimes it marks the beginning of a bull run, while other times it is the prelude to a storm. So, where will Bitcoin, U.S. stocks, and gold head this time after the rate cut?

Review of Three Interest Rate Cut Models

· 1995 Preemptive Rate Cut

Slight interest rate cut (75 basis points)

Economic soft landing, US stocks usher in a five-year bull run in the internet era.

Nasdaq has increased more than 5 times in 5 years.

· 2007 Economic Stimulus Rate Cut

Interest rates cut on the eve of the financial crisis, followed by a brief market surge before a crash.

S&P 500 retreats from high, global financial tsunami erupts

· Panic rate cuts in 2020

The COVID-19 pandemic triggered two emergency rate cuts, dropping from 1.75% to 0.25% within 10 days.

Unlimited QE releases massive liquidity, Bitcoin rises 17 times in 20 months, gold and US stocks hit new highs.

2025: More Like 1995 or 2020?

(Source: Trading Economics)

Economic data: Unemployment rate 4.1%, GDP continues to grow, inflation drops to 3%.

Market position: The S&P 500 and Bitcoin are both near historical highs.

Debt Pressure: The U.S. government debt accounts for 123% of GDP, limiting fiscal stimulus space.

In summary, this round is closer to the preventive rate cuts of 1995, but asset valuations are high, and the subsequent increases may not be as crazy as the bull run of the 1990s internet.

Bitcoin: May Welcome a 'Rational Prosperity'

2019 Interest Rate Cut: Bitcoin Rises Early, but Drops After the Rate Cut Takes Effect

Interest Rate Cuts in 2020: After a 312 plunge, a V-shaped reversal, ultimately rising 17 times.

2025 Outlook:

The interest rate cut is limited (a total of 100-150 basis points)

The ETF has been approved, institutional participation is high but more rational.

It may not experience a multiple surge, but instead rise steadily with liquidity.

U.S. Stocks: The Increase Depends on the Reason for Interest Rate Cuts

Historical data: The S&P 500 often shows positive returns 12-24 months after a rate cut.

Sector Rotation:

Strong economy + slight interest rate cut → cyclical sectors (financial, industrial) lead the rally

Weak economy + significant interest rate cuts → defensive sectors (healthcare, consumer staples) perform best

Small-cap stock advantage: After a 50 basis point rate cut, the Russell 2000 rose an average of 5.6% over 3 months.

Gold: The Stable Winner in the Rate Cut Cycle

Historical performance: Average increase of 32% two years after interest rate cuts, with all three cycles yielding positive returns.

Features of this round:

· Increased by 41% in a year, surpassing historical同期

· Central bank significantly increases holdings (de-dollarization)

· Geopolitical risks and inflation expectations support gold prices

Bonds: Limited Downside for Yields

Historical decline: 10-year U.S. Treasury yield decreased by 130-170 basis points

Current situation: 94 basis points have been cut, or there is still a space of 35-75 basis points.

The significance for risk assets: A rapid decline in yields may trigger a risk-averse sentiment, which is unfavorable for risk assets such as Bitcoin.

Conclusion: The liquidity gate will open, the key is the rhythm

Bitcoin: Highly likely to enter the "rational prosperity" stage, steadily rising rather than experiencing a crazy surge.

U.S. stocks: Need to observe the reasons for interest rate cuts and sector rotation, small-cap stocks may benefit more.

Gold: Still has allocation value, but may enter consolidation in the short term.

Bonds: The room for yield decline is limited, more as an anchor for funding costs.

History rhymes but does not repeat, the interest rate cut cycle in 2025 may not replicate the madness of 2020, but for most assets, a recovery in liquidity is still a positive sign. Investors should allocate cryptocurrencies, stocks, gold, and bonds wisely according to their own risk tolerance, to welcome the potential arrival of a "rational bull run."