Last week, the Federal Reserve announced a 25 basis point rate cut and also set a timetable to end balance sheet reduction by December 1st. With such a large liquidity dividend in front of us, the crypto market surprisingly moved in the opposite direction — not only did it not rise, but it also plummeted. ETH even triggered a $510 million liquidation event, prompting many to ask behind the scenes: Is the bull market over?

But this is actually a misinterpretation. Rather than saying the bull market has ended, it’s more accurate to say that the market is undergoing a major reorganization of funds. The real logic behind this is that the competition between BTC and gold over "hedging properties" is heating up, and the short-term fluctuations are simply various capital reallocating their positions.

Let’s break down this wave of market movements. When the Fed’s rate cut news first came out, BTC and ETH indeed surged. ETH even briefly hit $3,800. But the turning point came quickly — a single statement from Powell changed the situation. He said that a December rate cut "is not certain," and mentioned the risk of inflation continuing to rise. Once this was announced, market expectations immediately shifted: people thought the rate cut cycle was about to begin, but now they saw that policy still had uncertainties. Hedging sentiment instantly intensified, and the crypto sector subsequently corrected.

A key point to understand here is that the rise and fall of the crypto market is now tightly linked to macroeconomic policies. Every move by the Federal Reserve not only influences stock and bond markets but also directly determines the direction of global liquidity. Liquidity is like the oxygen for the crypto market — it cannot be lacking. The end of balance sheet reduction means the Fed is no longer withdrawing liquidity, which was originally a positive signal. But Powell’s comments about possibly slowing the pace of rate cuts made the market think that the positive outlook might be overextended, leading to this correction.

The "confrontation" between BTC and gold is essentially a contest for the status of the world’s safe-haven assets.