In 2024, interest rate cuts are unlikely to save the market as Bitcoin Halving faces systemic risks.

The Bitcoin halving cycle is often regarded as an important time node in the crypto assets market. According to this cycle, the Fed's interest rate cuts were supposed to start in the fourth quarter of 2023. However, the actual situation turned out to be different.

The government has taken a series of measures, including easing employment restrictions on illegal immigrants and expanding the size of government employees. These initiatives have somewhat affected non-farm employment data, causing the interest rate cut decision to be postponed. Meanwhile, to support the government's economic stimulus policy, the U.S. Treasury had to raise funds by issuing a large amount of national debt. This led to a significant decline in the 10-year Treasury yield, driving a seasonal bull market that spans the fourth quarter of 2023 and the first quarter of 2024.

As we enter the second quarter of 2024, with the Treasury's bond issuance rate stabilizing and the emergence of systemic risks in other parts of the world (such as the East Asian real estate market and the Japanese bond market), the demand for safe-haven assets has surged. The US dollar, US Treasuries, and gold have become the preferred safe-haven assets for investors. This trend, combined with the fact that the second quarter is traditionally a period when risk assets perform poorly, has led the entire crypto assets market into a slump.

In the third quarter of 2024, in order to save the election situation, policymakers began to cut interest rates. However, a peculiar phenomenon emerged in the market: despite the nominal interest rates falling, the yield on 10-year U.S. Treasuries rose inversely, approaching historical highs. Therefore, the market trends in the fourth quarter of 2024 are influenced not by external capital, but by a combination of political factors and seasonal factors.

By the first quarter of 2025, the market's focus had shifted from employment data, inflation indices, and other economic indicators to the conflicts between various government departments. The impact of this internal conflict is profound, and coupled with significant breakthroughs in the field of artificial intelligence challenging the United States' technological dominance, it has led to a massive sell-off of U.S. Treasury bonds. This decline in real interest rates, triggered by panic, did not bring about the anticipated spring rally; instead, it prompted a large outflow of capital from the market.

Currently, the United States is facing a once-in-a-century major transformation. Whether policies that support technological innovation can extend the life of the U.S. or lead to unpredictable consequences remains unknown.

In the face of such significant systemic risks, coupled with the uncertainty brought about by the upcoming cryptocurrency regulatory framework set to be introduced in July, the main participants in the market seem to have chosen to take preemptive action, prioritizing the assurance of their own liquidity.

The recent actions of several well-known trading platforms and project parties can be understood from this perspective. They either change their previous stance, take risks to launch new products, or even sacrifice some benefits to ensure the safety of funds.

In such a market environment, a conservative strategy to protect the principal may be a wise choice.