The Federal Reserve just delivered a 25 basis point cut, bringing rates to 3.5%–3.75%. In a normal cycle, this would be instant rocket fuel for $BTC and risk assets. But this isn’t a normal cycle.
Jerome Powell just pulled a classic "Hawkish Cut." While easing policy, he signaled deep caution regarding sticky inflation (still above 2%) and a weakening housing sector. Worse, he admitted the Fed is navigating with "missing data" due to the government shutdown.
The result? The market is pricing in only one more cut for all of 2026.
Why This Matters for Your Portfolio:
1. The Liquidity Trap:
Rates are important, but liquidity is king. Analysts are warning that without a return to Quantitative Easing (QE), volatility is guaranteed. If the Fed doesn’t expand its balance sheet, Bitcoin loses a key macro tailwind. We are moving from a "rate narrative" to a "liquidity narrative."
2. The Political Wildcard (2026):
The plot thickens in Washington. President Trump is reportedly eyeing May 2026 to replace Powell, with Kevin Hassett as a potential candidate to push for aggressive cuts. This clash between the Fed’s independence and political pressure creates massive uncertainty. Markets hate uncertainty.
3. The Risk-On Reality:
CME data shows only 24% of traders expect a cut in January 2026. The "easy money" euphoria is fading, replaced by a grind.
The Takeaway:
Don't just watch the rate percentage; watch the money supply. Bitcoin is currently caught between a cautious Fed and a political power struggle. The long-term thesis remains, but the short-term requires patience.
Is this the calm before the liquidity storm? 👀
