In the intuition of many investors, "interest rate cuts" are almost synonymous with the start button for a "bull run." However, looking back at the five major interest rate cut cycles of the Federal Reserve over the past thirty years, we find that the historical script is much more complex than imagined. The relationship between interest rate cuts and the market largely depends on the context and motivation behind the cuts. Historical interest rate cuts can be roughly divided into two categories: Preventive Cuts (: These occur when the economy has not yet entered a full-blown recession, but signs of slowdown or external risks are emerging. For example, in 1995 to address the Asian financial crisis, in 1998 to prevent a hard landing after overheating, and in 2019 to hedge against the risks of global growth slowdown. Such cuts generally succeed in injecting confidence and liquidity into the market, often accompanied by rising prices of risk assets. Rescue Cuts ): occur after a crisis has fully erupted, such as the bursting of the internet bubble in 2001 and the global financial crisis in 2008. In such cases, lowering interest rates is an emergency rescue measure that, while preventing a worse systemic collapse, often struggles to reverse the downward trend of the market in the short term. From the current environment, although the U.S. economy is facing uncertainties such as a weak labor market and tariffs, it has not fallen into a full-blown recession, and inflation has been somewhat controlled. Therefore, the interest rate cuts widely expected in the market are closer to "preventive rate cuts," which provides a relatively favorable macro backdrop for the rise of risk assets. The history of the cryptocurrency market also confirms the key role of liquidity.
The bull run of 2017 was ignited by the ICO frenzy, fueled by a global low interest rate environment that provided a speculative soil. In contrast, the super bull run of 2021 was a liquidity feast driven by multiple narratives such as DeFi and NFTs, under the "flooding" of the Federal Reserve's zero interest rates and unlimited quantitative easing (QE). Although the expectation of interest rate cuts in September 2025 is enough to excite the market, some more forward-looking analysts believe that the real "trump card" in this round of bull run lies in the choice of the next Federal Reserve leader. Economist and crypto analyst Alex Krüger has put forward a striking view: what determines the length of the current cycle is not Bitcoin's four-year halving cycle, but the personnel changes in Washington - specifically, the potential successor to Powell that Trump may nominate. He believes that the market's anxiety about the peak of this cycle is due to its failure to recognize the broader macro drivers. Krüger is convinced that this cycle is far from over, as he anticipates that changes in the leadership of the Federal Reserve will bring about "a dovish monetary policy far beyond current expectations," which has not yet been priced in by the market. He recalled that the bull run of 2021 ended in early 2022 not because of the so-called "four-year cycle" curse, but because the Federal Reserve had shifted to an "extremely hawkish" stance at that time. Powell's current term as leader will end in May 2026, but the nomination of a new leader may be announced earlier. The market has already begun to speculate on potential candidates, such as former Federal Reserve governor Kevin Warsh, who is thought to be more inclined towards a looser monetary policy than Powell. Once a clear dovish figure is nominated, the market will begin to price in the loosening policies that may come after their appointment, which could inject a new and more sustained upward momentum into risk assets.
Who will lead the future? In summary, the current cryptocurrency market is at a complex crossroads where short-term optimism intertwines with long-term variables. In the short term, Powell's dovish shift has greatly boosted market sentiment, and a "preventive" rate cut has almost become a foregone conclusion, providing a solid foundation for the continued rise of risk assets. However, from a more macro perspective, the impact of a single interest rate cut is ultimately limited. What can truly define the height and length of this bull run may be the policy tone of the next Federal Reserve. A more dovish Federal Reserve leadership implies a longer and stronger liquidity release cycle, which is the ultimate fuel driving asset prices to achieve exponential growth. Therefore, for investors, while enjoying the market dividends brought by the current interest rate cut expectations, it is even more important to closely monitor the movements in Washington. The interest rate decision in September will determine the short-term rhythm of the market, while the name of the next Federal Reserve leader may decide the ultimate fate of this bull run.
This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.
44 Likes
Reward
44
20
Repost
Share
Comment
0/400
XiaoxiaoOnlyLooksAtT
· 08-25 13:20
Just go for it💪 Just go for it💪 Just go for it💪 Just go for it💪 Just go for it💪 Just go for it💪
#打榜优质内容# Interest rate cuts = bull run?
In the intuition of many investors, "interest rate cuts" are almost synonymous with the start button for a "bull run." However, looking back at the five major interest rate cut cycles of the Federal Reserve over the past thirty years, we find that the historical script is much more complex than imagined. The relationship between interest rate cuts and the market largely depends on the context and motivation behind the cuts.
Historical interest rate cuts can be roughly divided into two categories: Preventive Cuts (: These occur when the economy has not yet entered a full-blown recession, but signs of slowdown or external risks are emerging. For example, in 1995 to address the Asian financial crisis, in 1998 to prevent a hard landing after overheating, and in 2019 to hedge against the risks of global growth slowdown. Such cuts generally succeed in injecting confidence and liquidity into the market, often accompanied by rising prices of risk assets.
Rescue Cuts ): occur after a crisis has fully erupted, such as the bursting of the internet bubble in 2001 and the global financial crisis in 2008. In such cases, lowering interest rates is an emergency rescue measure that, while preventing a worse systemic collapse, often struggles to reverse the downward trend of the market in the short term.
From the current environment, although the U.S. economy is facing uncertainties such as a weak labor market and tariffs, it has not fallen into a full-blown recession, and inflation has been somewhat controlled. Therefore, the interest rate cuts widely expected in the market are closer to "preventive rate cuts," which provides a relatively favorable macro backdrop for the rise of risk assets.
The history of the cryptocurrency market also confirms the key role of liquidity.
The bull run of 2017 was ignited by the ICO frenzy, fueled by a global low interest rate environment that provided a speculative soil. In contrast, the super bull run of 2021 was a liquidity feast driven by multiple narratives such as DeFi and NFTs, under the "flooding" of the Federal Reserve's zero interest rates and unlimited quantitative easing (QE).
Although the expectation of interest rate cuts in September 2025 is enough to excite the market, some more forward-looking analysts believe that the real "trump card" in this round of bull run lies in the choice of the next Federal Reserve leader.
Economist and crypto analyst Alex Krüger has put forward a striking view: what determines the length of the current cycle is not Bitcoin's four-year halving cycle, but the personnel changes in Washington - specifically, the potential successor to Powell that Trump may nominate.
He believes that the market's anxiety about the peak of this cycle is due to its failure to recognize the broader macro drivers. Krüger is convinced that this cycle is far from over, as he anticipates that changes in the leadership of the Federal Reserve will bring about "a dovish monetary policy far beyond current expectations," which has not yet been priced in by the market. He recalled that the bull run of 2021 ended in early 2022 not because of the so-called "four-year cycle" curse, but because the Federal Reserve had shifted to an "extremely hawkish" stance at that time.
Powell's current term as leader will end in May 2026, but the nomination of a new leader may be announced earlier. The market has already begun to speculate on potential candidates, such as former Federal Reserve governor Kevin Warsh, who is thought to be more inclined towards a looser monetary policy than Powell. Once a clear dovish figure is nominated, the market will begin to price in the loosening policies that may come after their appointment, which could inject a new and more sustained upward momentum into risk assets.
Who will lead the future?
In summary, the current cryptocurrency market is at a complex crossroads where short-term optimism intertwines with long-term variables. In the short term, Powell's dovish shift has greatly boosted market sentiment, and a "preventive" rate cut has almost become a foregone conclusion, providing a solid foundation for the continued rise of risk assets.
However, from a more macro perspective, the impact of a single interest rate cut is ultimately limited. What can truly define the height and length of this bull run may be the policy tone of the next Federal Reserve. A more dovish Federal Reserve leadership implies a longer and stronger liquidity release cycle, which is the ultimate fuel driving asset prices to achieve exponential growth.
Therefore, for investors, while enjoying the market dividends brought by the current interest rate cut expectations, it is even more important to closely monitor the movements in Washington. The interest rate decision in September will determine the short-term rhythm of the market, while the name of the next Federal Reserve leader may decide the ultimate fate of this bull run.