Last night’s crash caused many to stay up until the early morning monitoring the market. Bitcoin directly broke through $86,000, and the $2,800 support level for Ethereum also couldn’t hold. Where did this wave of sharp declines come from? The Federal Reserve suddenly changed its tone collectively.

Philadelphia Fed President Powell directly warned: "Interest rate cuts are already approaching dangerous levels." She hinted — inflation has not been fully subdued yet, and further cuts could lead to big problems. Chicago Fed President Goolsbee was even more aggressive, stating he would vote against easing if necessary. His reasoning was straightforward: previous rate cuts aimed to stabilize employment, but now service sector prices are still rising, coupled with data missing due to the government shutdown. In such a situation, cutting rates? Too risky.

Even more concerning is that the warning signals for financial stability have already sounded. Federal Reserve Board member Cook warned that asset prices are at historically high levels, and a market crash is "only a matter of time." Cleveland Fed President Harker was more explicit — the financial environment is already sufficiently loose, continuing to flood the market would only set a trap for itself.

Then, September employment data was delayed and released suddenly, hitting the market hard. Job gains were only 119,000, while expectations were 50,000! Although the unemployment rate rose slightly to 4.4%, the resilience of the labor market still exceeded expectations. Morgan Stanley quickly reversed its stance after reviewing the data: rate cut in December? Forget it, next year might be just as uncertain.

The situation is now very clear — the December Fed meeting will undoubtedly be a tough battle. Doves worry about a collapse in employment, hawks fear a rebound in inflation and financial risks. Incomplete data, high asset prices, and stubborn inflation are three major obstacles weighing down the market. If there is no rate cut in December, this year’s easing cycle might come to an end, and next year’s pace will have to slow down.

In the upcoming period, market volatility is likely to remain high. To all holding positions, tighten your seatbelts.