#数字资产生态回暖 The Chain Reaction of Federal Reserve Rate Cuts on Gold and Crypto Assets 💡

In the past two years, the most talked-about topic has been "rate cuts," but not many truly understand how they impact asset prices. Let's clarify from the beginning.

First and foremost—the most direct effect—is that when the central bank cuts interest rates, borrowing becomes cheaper, and more money floods into the market. Sounds good, but for those holding cash and bonds, it’s a disaster. Nominal interest rates fall, inflation persists, and real interest rates (nominal rate minus inflation) become negative or approach zero. In other words, the money in your bank deposit is losing value. What to do at this point?

Investors start looking for solutions. Traditional safe-haven assets are the first choice—demand for gold surges, and gold prices soar. But this liquidity surplus doesn’t just flow into precious metals; the crypto market can also benefit. $BTC, $ETH, $SOL —these bullish assets become targets for fund reallocation, as investors seek to hedge against inflation risk.

Simply put: Rate cuts → Collapse in holding yields → Investors scramble to buy hedging assets → Gold and crypto rise together. That’s the true logic of the market.