The most explosive news in the crypto circle these days belongs to the Federal Reserve. The key figure of the super hawkish camp suddenly hinted that there might be a significant rate cut by 2026. It sounds like great news, but is it really that simple? Let’s take a closer look.

**Why is a rate cut bullish for crypto assets?**

The essence of a rate cut is simple: money becomes cheaper, and market liquidity is abundant. No one is interested in fixed deposits anymore; where do idle funds go? Stocks, futures, Bitcoin, Ethereum—these high-volatility assets become hot favorites. Historical patterns are clear: each rate cut cycle has propelled cryptocurrencies to take off. This is nothing new; it has happened in previous rounds.

**But this time might be different**

The issue is that the background for this rate cut is a bit special. It’s not because the economy is overheating and needs cooling down, but possibly to "fight a fire." In such forced rate cuts, market reactions are often initially panic-driven. Funds will massively withdraw from risk assets—including cryptocurrencies—causing short-term declines. Only after genuine liquidity injection will there be a retaliatory surge. Simply put: the process will be bumpy, and mental preparation is crucial.

**Why do prices often fall sharply after the news is confirmed?**

It sounds counterintuitive, right? But this precisely illustrates the market’s complexity:

Smart big players have long pre-positioned. After the news is confirmed, they take profits directly, causing selling pressure to surge. Plus, the market had previously speculated on "unlimited rate cuts," and now that the pace might not be so fast, disappointment sets in. This is called "good news realizing as bad news," which is common in the crypto world.

**The chain reaction in global markets**

It’s not just about the Fed. Recently, Japanese government bond yields have surged, indicating rising global financing costs. Arbitrage funds will flow back from high-risk assets, affecting the crypto market as well. Additionally, traditional finance is learning from us; Nasdaq is trialing extended trading hours up to 23 hours. This seemingly small change could, in the long run, alter the entire pricing system and liquidity landscape.

**How to operate without losing money?**

First, don’t rush to go all-in. Jumping in with full positions immediately after the news breaks is typical rookie behavior. Let the market sentiment fully digest, and wait for a pullback before finding a good entry point.

Second, hold core positions in mainstream coins. Bitcoin’s status as digital gold is unshakable, and Ethereum still has upgrade expectations. These assets can withstand volatility, and their long-term trend remains intact.

Third, stay away from those lacking fundamentals. During volatile times, altcoins and aircoins die the fastest. Holding onto mainstream coins with real applications and ecological support is the key to survival.

A rate cut is indeed a long-term positive, but in the short term, there may be more turbulence. Build mental resilience, stay rational amid panic, and you can truly profit in the next upward cycle.