crypto101

Crypto doesn’t move in a vacuum. When the Fed changes the price of money, it changes the appetite for risk—and that flows straight into (or out of) Bitcoin and altcoins. Here’s the simple playbook.
TL;DR
• Fed cuts rates → money gets cheaper → investors take more risk → crypto often benefits.
• Fed hikes rates → borrowing gets pricey, USD tends to strengthen → investors de-risk → crypto faces pressure.
• But it’s not automatic: the reason behind a cut/hike, the dollar’s strength, real yields, global liquidity, and crypto-native news all matter.
How it works (quickly)
1. Cost of Capital & Risk Appetite
Lower rates make borrowing cheaper and cash yields less attractive, so capital hunts for higher returns (stocks, crypto). Higher rates do the opposite.
2. U.S. Dollar (DXY) & Real Yields
BTC often moves opposite a stronger USD and higher real yields. These are “macro headwinds” for assets priced in dollars. Correlations change over time, so treat them as signals—not laws.
3. System Liquidity (QE/QT, M2)
Crypto is sensitive to global liquidity. When liquidity expands (or tightening eases), risk assets breathe; when liquidity is drained, markets feel “dry.”
“Fed cut = always bullish?” — Not necessarily
• Cut because inflation cools & growth holds → often supportive for risk.
• Cut because growth is cracking → can be a bull trap if fear dominates; markets may still de-risk.
Recent context (big picture)
• On Oct 29, 2025, the Fed cut 25 bps, taking the target range to 3.75–4.00% (from 4.00–4.25%). Earlier, in 2022–2023, the Fed had lifted rates to a peak around 5.00–5.25% and held before easing.
Meaning: Policy isn’t at 2023’s peak anymore, but crypto’s reaction still depends on the dollar, real yields, and liquidity.
Common Myths
• “The Fed is everything.” Not true — crypto also moves on spot ETF flows, halvings, regulation, DeFi/exchange events, stablecoin supply, and tech upgrades.
• “Weak USD = BTC up.” Not always — correlations change by market regime.
What to Watch
• FOMC schedule, dot plot, Fed chair remarks
• CPI & NFP → rate expectations
• DXY & 10Y real yields → macro backdrop
• Liquidity/M2, financial conditions
• Crypto factors: ETF flows, stablecoin supply, upgrades, regulation news
Bottom Line
• Rate cuts → higher risk appetite (bullish if growth steady, inflation cools)
• Rate hikes → lower risk appetite (bearish)
• Always check why rates move—and track USD, real yields, liquidity, and crypto-specific catalysts.
#TrumpTariffs #MarketPullback #Fed #crypto101

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Investing in cryptocurrencies or any other asset requires careful consideration. One way to approach this is by practicing due diligence, which includes conducting your research before making any investment decisions. This is commonly known as DYOR, or Do Your Own Research.

When researching cryptocurrencies, it's crucial to understand the underlying technology and potential use cases to determine whether it's a good investment opportunity. It's also important to ensure that the sources of information you use are trustworthy, reliable, and unbiased.

Analyzing market trends is another critical aspect of practicing DYOR. Looking at factors such as price movements, trading volume, and market capitalization can help you make informed decisions about when to buy or sell.

Scams are unfortunately prevalent in the cryptocurrency space, so it's essential to be cautious of investments that offer guaranteed returns, promise quick profits, or use high-pressure sales tactics.

It's vital to understand the risks associated with investing in cryptocurrencies, such as market volatility, hacking, and regulatory uncertainty. Only invest what you can afford to lose.

Finally, seeking advice from financial advisors or cryptocurrency experts can provide valuable insights and help you understand the risks and benefits of investing in cryptocurrencies.

In conclusion, practicing DYOR is a critical practice for anyone interested in investing in cryptocurrencies. It helps investors make informed decisions, avoid scams, and align their investments with their goals and risk tolerance. By following the tips mentioned above, investors can practice DYOR effectively and make smart investment decisions.