The Federal Reserve's interest rate decision hides secrets: A survival guide for retail investors and a new logic for the cryptocurrency market game.

On the early morning of October 30, 2025, the Federal Reserve's latest interest rate decision was announced—the target range for the federal funds rate has been set at 3.75%-4%. Although this is a 25 basis point reduction from the previous range of 4.25%-4.5%, it is still higher than some market expectations of 3.75%. This seemingly "expected" operation actually conceals multiple signals and games, with the encryption market under short-term pressure but the long-term logic unchanged. As researchers deeply engaged in the digital asset field for many years, we analyze the underlying logic of this "interest rate game" from three levels: the essence of the policy, market reactions, and retail investor strategies.

1. The Federal Reserve's "ambiguous signals": neither hawkish nor dovish

The most intriguing aspect of this resolution lies in its "ambiguity." Despite a 25 basis point rate cut, Powell emphasized in the post-meeting statement that "the pace of inflation decline is still below expectations," suggesting that there may only be two more rate cuts for the remainder of 2025. This statement neither fully releases easing expectations nor maintains a tightening stance, but instead creates a market consensus of a "policy wait-and-see period."

Key divergence point:

Committee opinions are divided: Kansas City Fed President Esther George opposes a rate cut, advocating for maintaining the Intrerest Rate; while Governor Michelle W. Bowman supports a more aggressive 50 basis points cut. This "hawk-dove showdown" exposes deep divisions within the Fed regarding the economic outlook—on one side, concerns about sticky inflation, and on the other, anxieties about a rapidly weakening labor market.

The implied signal of the end of balance sheet reduction: The FOMC announced that it will end the asset balance sheet reduction plan on December 1, and the redemption principal of MBS will be allocated to short-term government bonds. Although this operation does not directly print money, it indirectly releases funds by increasing market liquidity, which is equivalent to laying the groundwork for "targeted easing" in the encryption market.

Market Interpretation Differences:

Short-term bearish: Interest rates are still above the peak in 2024 (5.25%-5.5%), the yield advantage of USD assets has not completely disappeared, and the short-term pressure of funds returning to traditional markets still exists.

Long-term benefits: If employment data continues to worsen, the Federal Reserve does not rule out accelerating interest rate cuts. Coupled with the liquidity improvement brought by the end of balance sheet reduction, the encryption market may迎来 "golden window."

2. The "stress test" of the encryption market: short-term fluctuations or long-term reversal?

Historical experience shows that the Federal Reserve's policy adjustments on the encryption market follow a "short-term sentiment game + medium and long-term capital logic" dual-track model.

Short-term impact:

Liquidity Sucking Effect: Although the current Intrerest Rate has been lowered, it is still 1.5 percentage points higher than the peak in 2023. The gap between the dollar deposit rate (such as US Treasury yield) and the "opportunity cost" of Bitcoin has not yet fully narrowed, and the pressure of capital diversion remains.

Technical pressure: Bitcoin briefly fell below the $110,000 mark after the announcement, and Ethereum also saw a 3.5% pullback. On-chain data shows that the volume of large sell orders surged by 12% in the past 48 hours, indicating that some short-term funds have begun to take profits.

Long-term support:

Enhanced inflation hedging attributes: If the Federal Reserve's interest rate cut cycle extends to 2026, the dollar's credit will face structural depreciation pressure. The anti-inflation demand for Bitcoin as "digital gold" may significantly rebound, and historical data shows that Bitcoin has a -0.8 correlation with the dollar index.

Regulatory Breakthrough Catalyst: The SEC has recently accelerated the pace of approving Bitcoin ETFs (such as BlackRock's IBIT seeing a single-day net inflow exceeding 1.2 billion USD). If the ETF scale surpasses 60 billion USD by the end of 2025, it will directly drive institutional funds to flow into the encryption market through compliant channels.

3. Retail Investor Survival Guide: Finding Certainty in the "Policy Fog"

In the face of the Federal Reserve's "ambiguous signals" and the market's extreme fluctuations, retail investors need to establish a framework of "defensive strategies + dynamic adjustments":

1. Position Management: Use the "barbell strategy" to avoid extreme risks

Core Position (60%-70%): Hold mainstream cryptocurrencies such as Bitcoin and Ethereum, utilizing their anti-inflation properties to navigate through cycles. Currently, Bitcoin's valuation has retraced to the level of October 2023. Historical data shows that the annualized volatility of Bitcoin typically narrows to below 40% during the late stages of interest rate hikes.

Satellite Position (20%-30%): Allocate to high-growth ecosystem projects such as Solana (SOL) and Avalanche (AVAX) to capture the benefits of funds migrating from traditional finance to Web3.

2. Fund Flow: Keep an eye on "whale movements" and ETF data

On-chain indicators: Pay attention to large transfers (>1000 BTC) and net inflows to exchanges. If the withdrawal amount from the exchange exceeds 50,000 BTC for three consecutive days, it may indicate the entry of institutional funds.

ETF Tracking: If the average daily trading volume of products like BlackRock IBIT and Fidelity FBTC surpasses 800 million USD, it typically indicates that the market has entered an "institutional dominance" phase.

3. Emotion Management: Capture Turning Points with "Reverse Thinking"

Short-term volatility ≠ long-term value: During the interest rate hikes by the Federal Reserve in 2022, Bitcoin plummeted from $69,000 to $16,000, but ultimately achieved a 400% rebound in 2024. The current volatility (25%) is far lower than the peak in 2022 (80%), and panic has been partially released.

Policy Divergence = Layout Window: The "hawk-dove opposition" within the Federal Reserve often signals that the policy turning point is approaching. If the non-farm payrolls in November fall below 900,000, Bitcoin is expected to kick off a new round of rising cycle.

Conclusion: Finding Structural Opportunities Amid Uncertainty

The Federal Reserve's decision on interest rates this time essentially conveys a "policy wait-and-see" signal to the market, rather than providing clear directional guidance. For retail investors, instead of getting caught up in short-term fluctuations, it is better to focus on the three core variables:

1. Inflation Decline Rate: If the core CPI falls to 2% by the end of 2025, Bitcoin may exceed $130,000;

2. Regulatory breakthrough intensity: If the spot ETF scale exceeds 80 billion USD, the encryption market will welcome the "institutionalization of the first year";

3. Evolution of Geopolitical Risks: If conflicts in the Middle East escalate, safe-haven funds may accelerate their flow into Bitcoin.

Remember: the essence of the encryption market is a "decentralized experiment of capital games." Short-term fluctuations are the norm, but long-term value will eventually be realized. In the "policy fog" of the Federal Reserve, maintaining calm and rational layout is the most powerful survival rule for retail investors at the end of a bear market. #参与创作者认证计划月领$10,000 #GatePay国家码功能上线 #美联储如期降息25基点