The Federal Reserve data released in the early morning showed an unexpected turn— the probability of a rate hike in January dropped from 28.8% to 13.3%. Normally, this would be good news, but the crypto market reacted by weakening, with BTC and ETH both pulling back. This contrast actually hides some logic.

Many newcomers misunderstand: a decrease in the probability of a rate hike ≠ imminent easing of liquidity. In fact, this data reinforces a reality— the high interest rate cycle will last longer. Some people still hoped to see signals of easing in January, but now this data essentially announces that liquidity will remain locked in the short term.

How important is liquidity to the crypto market? Just look at XRP, ETH, and other tokens that are highly sensitive to capital flows. In an environment of short-term liquidity tightness, funding costs stay high, and major institutions are less likely to enter the market. Retail investors chasing gains and selling on dips are further amplified. This isn’t an issue with individual tokens, but a disruption in the overall market rhythm.

Interestingly, former White House economic advisor Hassett directly criticized, saying the Fed’s rate cuts are already seriously lagging, and further delays could drag down the entire economy. This creates an awkward deadlock: the Fed stubbornly maintains high interest rates while experts hype risks as being beyond control.

But I believe, it’s precisely this contradiction that hides opportunities. When market expectations are completely chaotic and consensus is shattered, it often signals the formation of a bottom. The current panic in the crypto market is essentially a confusion about future direction. The key is to watch two signals: first, whether employment data deteriorates rapidly; second, whether inflation data can continue to decline. Once these two break down, even the Fed’s toughness will be forced to adjust.