The FOMC meeting in November 2025 just concluded, and the Federal Reserve announced a 25 basis point rate cut. This marks the most significant shift in monetary policy since the COVID-19 pandemic crisis in 2020. Global markets immediately sensed signals of liquidity easing.

Three key points behind the rate cut are worth noting:

First, inflationary pressures are indeed cooling down. Core PCE has dropped to 2.1%, nearly reaching the Fed's target. Second, the employment market is less optimistic — the unemployment rate has remained at a high of 4.3% for three consecutive months, forcing policymakers to reconsider their stance. Third, the bond market had already started pricing in this rate cut, with the 10-year U.S. Treasury yield falling by 50 basis points from its high, showing that smart money was ahead of the curve.

Once the rate cut was announced, various assets responded quickly. The dollar index dropped 60 points in a short period, gold rose by $25, and risk aversion and inflation expectations were simultaneously ignited. In the stock market, Nasdaq futures surged 1.8% in a single day, and the tech sector took off.

Cryptocurrency markets performed even more remarkably. Bitcoin surged 6% on the same day, heading straight for the $110,000 mark. During liquidity easing cycles, high-volatility assets tend to be the biggest winners — historical data shows that within three months of the first rate cut, gains in Bitcoin and gold often outperform traditional stock indices by a significant margin.

The current situation resembles a replay of past cycles. Easing policies have opened the floodgates of capital, and market sentiment is shifting from cautious to aggressive. For allocation strategies, mainstream cryptocurrencies like Bitcoin and Ethereum can serve as core holdings, while gold and tech stocks provide hedging and balance. A balanced approach is key to standing firm in this cycle.

Of course, rate cuts are not a panacea. Future inflation trends, employment data, and policy continuity will influence market rhythms. But for now, the liquidity faucet has been turned on.