Talking about Trump's interest rate cut complex: Turn on the money printing press and make America great again?

! [Talking about Trump's interest rate cut complex: Turn on the money printing press and make America great again?] ](https://img.gateio.im/social/moments-4daa6ee6cef8ec039548ac7f82d9ade7)

Article source: Words Li Huawai

In the previous article, we mainly rethought the development of the market, and in terms of the current market sentiment, many people seem to have renewed hopes for the expectation of a rate cut.

The last time the crypto market enjoyed the benefits of a large-scale rate cut was in 2020, when the federal funds rate (the Fed's adjusted rate) was not very high before the pandemic, only 1.5% — 1.75%. However, in response to the impact of the pandemic, the Fed made two emergency rate cuts in a month: the first by 50 basis points (0.5%) and the second by 100 basis points (1%).

As a result, the federal funds rate at that time was directly reduced to 0%-0.25%, which meant that borrowing (credit) became easier than ever, and as the cost of borrowing decreased, a large amount of liquidity poured into the market (including the crypto market) and pushed up the prices of various risk assets, which became one of the main drivers of the great bull market in 2021.

1.Trump's interest rate cut complex

A BBC report at the time (16 March 2020) was also interesting: as the Fed cut interest rates to zero "with all the ammunition at once", Trump, who had previously criticized Powell for being "not good", also made a rare change of praise as "fantastic", "very good news" and "made me very happy". This is shown in the figure below.

! [Talking about Trump's interest rate cut complex: Turn on the money printing press and make America great again?] ](https://img.gateio.im/social/moments-2f08ed054e3dff19ef45ad539fb4ef69)

It can also be seen from the reports at the time that Trump has always been more "complex" about the "interest rate cut".

Five years have passed, and I remember that after Trump returned to the presidency this year (2025), he also publicly said: he understands interest rates better than Fed Chairman Powell. This is shown in the figure below.

! [Talking about Trump's interest rate cut complex: Turn on the money printing press and make America great again?] ](https://img.gateio.im/social/moments-5e582a31f513b8b3aa5980a695c8c36e)

However, judging from a series of things Trump has done in the past two months, as well as the resulting huge volatility impact on the market (including U.S. stocks, crypto markets, etc.), it seems that the Fed still has no arrangement to "listen to him" this time, and this is what many people in the market are currently speculating, the reason why Trump is doing so many things now is to "force" the Fed to cut interest rates.

2.Impact of interest rate cuts on the market

We continue to return to the topic of the crypto market.

It is precisely because of the interest rate cut in 2020 that extremely low borrowing costs and larger-scale liquidity are also breeding the process of a new bull market.

But if we look back at the historical price trend, we can also find that the effect of interest rate cuts at that time was not immediately manifested in the crypto market, and the big bull market did not break out until 2021, which is actually the point we mentioned in the previous article: the crypto market mainly enjoys "excess liquidity", that is, the large-scale liquidity brought by interest rate cuts will first flow into traditional markets such as US stocks, and then excess liquidity will flow into high-risk markets of sub-scale such as the crypto market.

However, this situation will slowly change, because as more and more large institutions have begun to deeply participate in the crypto market in recent years, the crypto market has become more and more synchronized with the US stocks, once the market has large-scale liquidity, then there may also be some funds that choose to flow into the crypto market in advance.

As we move into 2022, the Fed has restarted a new round of interest rate hikes, raising rates 6 times in 2022 alone (in March, May, June, July, September, and December), and by July 2023, it has raised interest rates 11 times, reaching 4.33%-5.50%, the highest level in 20 years. This is shown in the figure below.

! [Talking about Trump's interest rate cut complex: Turn on the money printing press and make America great again?] ](https://img.gateio.im/social/moments-17539e64ddb2c70d0834e2a18ef4282e)

If we look at it in terms of time, the period 2022–2023 also coincides with a new bear market in the crypto market.

As time continues into 2024, the Fed has restarted a new bull market with the Fed restarting to cut interest rates (September 2024 started a new cycle of rate cuts) and injecting new liquidity into the market, coupled with the push of macro narratives such as ETFs and some new internal narratives such as the BTC ecosystem.

And we can also see from the continuous growth of stablecoins, and some funds only began to enter the market on a large scale around that time. We've all been through the ensuing events, such as MemeCoin's massive boom (price hype) and BTC breaking the $100,000 milestone and continuing to hit new all-time highs......

So, what's next in the playbook? I don't know about this, we need to pay attention to the Fed's interest rate meeting next week (March 19), as shown in the chart below.

! [Talking about Trump's interest rate cut complex: Turn on the money printing press and make America great again?] ](https://img.gateio.im/social/moments-39226e7114f09842dd84042972fd84d0)

However, judging from some of the current forecast data, the expectation of a rate cut in June at least is relatively high, as shown in the chart below.

! [Talking about Trump's interest rate cut complex: Turn on the money printing press and make America great again?] ](https://img.gateio.im/social/moments-02582b660b4fbacc23368f4dfc90cc6d)

Although the expectation of this year's interest rate cut is still there, in fact, through the above, we can also find the difference between the interest rate cut in 2020 and the interest rate cut in 2025: in addition to the difference in the starting interest rate, the biggest difference is the speed of interest rate cuts, the speed and magnitude of the last round of interest rate cuts are relatively large, and this round of interest rate cuts currently looks like a slow and gradual process, unless there is also a larger-scale black swan event, such as the US stock circuit breaker we mentioned in the article a few days ago (March 11).

As we mentioned above, the crypto market mainly enjoys excess liquidity, even if this situation may change in the future, but if the process of cutting interest rates is slow and gradual, then for the current stage of the crypto market, it may also be a gradual market, and for ordinary investors, trading will become more difficult and cautious, unless there are also extreme conditions, such as:

On the positive side, meet the other two of the three core factors (narrative, macro, policy) mentioned in our previous article, that is, new changes or innovations within the crypto market (which cannot be seen for the time being), or new major positive stimulus in the policy, where the policy mainly refers to the US side (of course, if a large country in the East can open up, then it is a greater positive, but it is impossible at present). On the negative side, there is a black swan event that is bigger than the tariff war, which can directly bring the market to collapse.

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