Will the Federal Reserve cut interest rates by over 100 basis points this year? Inflation data presents new opportunities for liquidity in the crypto space

【Block Rhythm】 Recent signals from the Federal Reserve are worth paying attention to. Fed Governor Milan stated on January 6th that the latest data continues to support the direction of rate cuts. More importantly, he explicitly mentioned that this year the rate should be cut by more than 100 basis points — a significant margin.

From the data, the core inflation rate is now approaching the Fed’s target, which means inflationary pressures are gradually easing. But here’s the issue: the current policies of the Federal Reserve are actually restrictive; in other words, tightening policies are dragging down economic growth.

What does this mean for the crypto world? Once rate cut expectations are established, market liquidity could improve significantly. Lower funding costs usually promote reallocation into risk assets. If the Fed indeed cuts rates substantially within the year, the crypto market’s funding environment will be more favorable. Of course, all this still depends on subsequent economic data performance.