This article is reprinted with permission from Huali Huawai, and the copyright belongs to the original author.
Time is the most equitable existence; everyone has time, but many people only realize that time is their greatest wealth when they lose it.
At the beginning of the year (January 3), we published a topic article on the 16th anniversary of Bitcoin's birth, which listed the price changes of Bitcoin over the past decade in a timeline format, as shown in the figure below.
I remember some friends commented after reading it, lamenting that they missed the golden period of Bitcoin's surge. If they had bought dozens of Bitcoins ten years ago and held onto them until now, they would have at least 300 times the return.
In theory, it can be said that, but buying Bitcoin ten years ago and holding onto it until now is a very difficult thing to do because, for most people, it is impossible to have such extreme patience.
- The market is an expression of emotion
Time is everyone's greatest advantage, but this advantage requires enough patience to be fully utilized.
Especially in investment, one should never harbor any luck mentality, thinking that one can always outsmart the market with their intelligence and wit. The market actually does not care how smart you are; after all, the market is merely an expression of emotion. Only when we try to overcome our emotions and can reasonably hedge our reckless behaviors do we have the opportunity to maximize the advantage of time.
In the previous article (August 5), we mainly discussed the topic of "opportunity" and mentioned that the market never lacks opportunities. From my own experience, I believe that waiting for opportunities is a good thing because the market provides us with compounded opportunities, which can continuously accumulate and generate exponential growth.
For example, take Bitcoin: as long as we can leverage the advantages and patterns of cycles, identify the extreme situations in the market, remain calm, and patiently wait for some opportunities, trade infrequently, avoid random leverage, and persist through several cycles, we are likely to achieve good results.
Of course, there is a premise here: choosing the right targets and systems is more important than short-term efforts. To put it more bluntly, if you find an investment opportunity with an average annual return of 10% and stick with it long-term, relying on compound interest accumulation, the returns decades later will definitely be substantial, and assets like Bitcoin remain one of the best choices.
I remember in the first two years after entering this field, like most newcomers, I often liked to stare at the exchange backend and wallet balances, focusing on the changes in trading profits (floating income). The result was that I often emotionally leaned towards forcing myself to make various trades to earn more income daily, which led to inner restlessness and increasingly irrational trading, and sometimes even losses.
Later, as I began to change my strategy and shifted my focus to accumulating coins, transforming from a frequent swing trader to a periodic swing trader (trading only a handful of times a year), my mindset gradually improved, and I had more time and energy to engage in new thoughts and summaries.
As for me now, in trading operations, if I go months without trading or making money, or if my wallet account experiences significant changes due to market volatility (floating losses in USDT), I don't care at all because I believe this market will continue to rise in the long term. What I value are the opportunities in the next 5, 10, or even 20 years, as long as I keep myself patient.
If one truly understands that the market is merely an expression of emotion, then what we need to do becomes relatively simple. When people feel fear, we can act against that fear, and when people start to become optimistic or experience FOMO, we can begin to sell in batches (and continue to wait for new opportunities to accumulate at lower prices).
As many know, Buffett's classic saying: "Be fearful when others are greedy, and greedy when others are fearful." The core of Buffett's statement is not just about reverse thinking; it also tells us the importance of self-emotional control in investing, that investing requires rationality, not following the crowd.
However, the reality is often that while everyone understands the reasoning, many still cannot live well. In terms of investment, perhaps experiencing losses or setbacks is the best teacher. This might also be an interpretation of "suffering is a blessing," so there is no need to fear temporary losses. Experiencing losses early is not a bad thing, but one should conduct necessary reviews, reflections, and summaries after losses to avoid mindlessly falling into continuous losses and ultimately being ruthlessly eliminated by the market.
Being able to earn more money is certainly something to be happy about, but we can also change our perspective: when making money no longer excites a person, perhaps they are truly not far from successfully making money. Conversely, if a person still feels excited about making money from a particular trade, they may make even bigger mistakes in new trades.
In summary, we need to learn to become calm investors, find the balance point of our risk preferences, and maintain focus and patience based on a higher time frame to achieve sustainable preservation and appreciation of our investment portfolio.
Of course, if you still believe you are the chosen one, capable of defeating the market, or even able to seize overnight wealth opportunities like some reported cases, then you can continue to gamble or play; I won't stop you because I can't, and I have no obligation to do so.
- Interest Rate Cuts = Bull Market?
In terms of current sentiment, although Bitcoin remains at a high of $110,000, achieving about a 60% increase since April, from the perspective of retail investors, people seem to still be in agony.
Many retail investors thought Bitcoin at $20,000 was too expensive to buy in 2023, thought Bitcoin at $50,000 was too expensive to buy in 2024, and similarly think Bitcoin at $80,000 is too expensive to buy this year. Thus, they hold onto a large proportion of altcoins while waiting, and many people's waiting has slowly turned into agony, with their targets shifting from the initial 100x, 10x… to just wanting to break even. These people wander through the comment sections of various KOLs, watching them shout that the altcoin season is still ahead, and thus continue to hold onto the fantasy of making money amidst their agony.
As for the topic of altcoin season, we have discussed it extensively in previous articles, so we won't elaborate further here. We just want to state a basic principle: if the market allows everyone to make money, then where will the money you earn come from?
In simple terms, the money you/I earn is also the money others lose. The essence of the market lies in liquidity, as we mentioned in previous articles: if you don't know where the market's liquidity comes from, then you are the one providing liquidity.
Currently, people's fantasies can be roughly divided into a few types, such as:
The fantasy that the Federal Reserve can quickly cut interest rates, bringing more liquidity to the market, thus leading to a comprehensive altcoin season.
The fantasy that the king of altcoins, Ethereum, can quickly break its historical high in price performance, triggering a new round of comprehensive altcoin season.
But there is another issue that needs to be faced: have you made the worst-case plan (i.e., set a Plan B)? That is, if the Federal Reserve cuts interest rates as expected this year, and ETH also breaks its historical high this year, but the market still does not welcome the comprehensive altcoin season you are hoping for, and your heavily invested altcoins still cannot break even or make money, what will you do then?
Take the interest rate cut as an example; recently, I have seen many comments shouting: "Interest rate cut = bull market." Strictly speaking, I believe this statement is debatable.
Through the Federal Reserve observation tool, we can find that currently, the probability of an interest rate cut to 3.5%-3.75% this year is 51%.
In other words, this still seems to be some distance from the market-neutral interest rate of 3%-3.5%, and this result should not be considered an optimistic signal, as an interest rate cut does not necessarily lead to a new bull market immediately.
I remember in the article on March 2, when discussing the topic of interest rate cuts, we also mentioned that since last year (2024), the market has been focusing on expectations related to interest rate cuts. But to be honest, at this stage, the crypto market itself is at most a small market. We will absorb liquidity from stock and other financial markets due to interest rate cuts, but we shouldn't expect liquidity to flood into the crypto market first.
Later, in the article on March 16, we continued to elaborate on the topic of interest rate cuts, stating that in the last bull market, it was precisely because of the extreme interest rate cuts in 2020, the extremely low borrowing costs, and larger-scale liquidity that a new bull market was nurtured. However, if we look back at historical price trends, we can also find that the effects of interest rate cuts at that time did not immediately manifest in the crypto market; the bull market did not explode until 2021. At the current stage, the crypto market mainly enjoys "excess liquidity," meaning that the large-scale liquidity brought by interest rate cuts will first flow into traditional markets like US stocks, and only then will the excess liquidity flow into the crypto market, which is a secondary high-risk market. However, this situation will gradually change, as more large institutions have begun to deeply participate in the crypto market in recent years, and the crypto market is increasingly synchronized with US stocks. Once the market has large-scale liquidity, some funds may choose to flow into the crypto market in advance.
At that time, we also mentioned in the article that the interest rate cuts in 2020 are different from those in 2025. Besides the difference in starting rates, the biggest difference is the speed of the cuts. The previous round of cuts was relatively fast and large, while the current round (2025) seems to be a slow and gradual process. Therefore, for the current crypto market, it may continue to be a gradual market.
Additionally, in the article on April 14, we again mentioned the topic of interest rate cuts and stated: do not simply think that as long as the Federal Reserve cuts interest rates, the market will keep rising. The relationship between interest rate cuts and market rises is not as simple as we imagine. For example, once the market clarifies the expectations of interest rate cuts, even if the cuts have not officially occurred, the market is likely to experience a wave of speculative rises in the short term. Conversely, when the official interest rate cut arrives, although the policy is to inject liquidity, the market may also experience a new round of declines or pullbacks early in the interest rate cut. Interest rate cuts are certainly beneficial for the market, but do not directly equate interest rate cuts with price increases, as the market is always dynamic and volatile.
Many people tend to view issues from a single perspective. They hope the Federal Reserve can quickly cut interest rates because cuts will bring new liquidity, and new liquidity can drive up the prices of risk assets. But looking at it from another angle, if the probability of interest rate cuts rises, it also means that the economic situation in the US (and globally) is becoming more severe. If someone pays attention to macro data, they will know that the current employment data in the US is not optimistic, the real estate market is struggling, PMI is below the growth line (50), and the fiscal deficit continues to expand… These data and phenomena all indicate signs of economic contraction.
If we combine the market trends with these macro situations, it is not an exaggeration to say that these are the important reasons for the recent market fluctuations. However, it seems that there is little possibility of change in the short term.
Of course, it is precisely because the market is volatile and there are various uncertain factors that some special demands or speculation can still lead to price increases for certain assets in the short term. For example, recently, some listed companies have started to frantically accumulate and reserve ETH, which directly contributed to a rapid rebound in ETH prices. But for the market, in the long run, if there are no significant changes in the macroeconomic environment, the overall market may still remain in a relatively chaotic state of fluctuation, making it difficult for us to directly welcome a comprehensive and widespread surge (i.e., the crazy bull market people idealize).
In summary, for risk assets, interest rate cuts are indeed something people should look forward to, as they mean more liquidity. However, we should not be overly optimistic just because we anticipate the arrival of interest rate cuts. It is important to understand that interest rate cuts are merely a key condition that catalyzes the price increase of some risk assets, not the result itself. From a long-term perspective, the market will not continue to rise simply because of direct interest rate cuts; rather, it should begin to rise steadily as signs of economic recovery emerge.
Interest rate cuts occur because the economic situation is deteriorating, not improving. In the short term, the market may cheer and experience a temporary peak due to interest rate cuts. Smart money may also take advantage of the cuts for short-term speculation, pushing up the prices of certain assets. However, in the long run, smart money will definitely not take excessive risks. Interest rate cuts are not just a blessing for rising prices; they can also serve as a warning. If the backdrop of interest rate cuts is a further deterioration of the economic situation, then this issue may be more serious than it appears on the surface.
Therefore, we must maintain calm thinking. In addition to steadfastly holding BTC, we should also try to keep a sufficient proportion of liquidity (cash/USDT) in our positions.
Related Articles: Trump, Tariffs, and the Market Maze under Interest Rate Cut Games: AI and Crypto Assets as the Only Highlights
Original: “Interest Rate Cuts = Bull Market?”
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