On December 17, the remarks of Federal Reserve Governor Waller became a focal point for the market—he clearly stated that the Federal Reserve's monetary policy remains in a restrictive range, with still 50 to 100 basis points available for cuts, while also emphasizing that "there is no need to rush to cut rates" and that rates should be steadily lowered to a neutral level. This statement confirms the major trend of the Federal Reserve's policy shift and sets a baseline for the rhythm of rate cuts, providing key guidance for financial markets, especially for risk assets such as cryptocurrencies and U.S. stocks.
1. The core connotation of the interest rate cut signal: there is space but no urgency.
Waller's remarks convey two core messages: first, the fundamental support for interest rate cuts has formed, with concerns about a weak labor market and moderate inflation expectations together providing a rationale for the Federal Reserve to ease monetary policy. A reduction space of 50-100 basis points has also reassured the market that "policy easing is expected"; second, interest rate cuts will follow a "steady approach" rather than the market's previous bets on "rapid cuts". The Federal Reserve prefers "gradual adjustments" to avoid economic or financial market volatility caused by abrupt policy shifts.
This attitude of 'having space but not being impatient' is essentially the balance the Federal Reserve is trying to maintain between 'controlling inflation' and 'stabilizing the economy': currently, inflation is trending moderate but has not fully returned to the 2% target, and a hasty rate cut could lead to a rebound in inflation; meanwhile, signs of weakness in the job market require that the Fed cannot maintain high interest rates for too long, thus 'gradual rate cuts' become the optimal choice.
2. Direct impact on the market: Risk assets are moderately warm but caution is needed for expected adjustments.
From the perspective of asset price reactions, Waller's statement provides a moderately bullish support for risk assets, but a unilateral surge is unlikely in the short term:
1. The cryptocurrency market: Expectations for rate cuts mean that market liquidity is expected to gradually loosen, and cryptocurrencies, as high liquidity sensitive assets, will benefit from improved funding conditions in the long term. However, due to the constraints of the 'gradual rate cut' pace, the market is unlikely to experience a short-term surge. Small fund traders can focus on tactical opportunities in mainstream coins, relying on Federal Reserve policy points for high sell-low buy strategies while strictly controlling positions to avoid chasing highs.
2. The U.S. stock and bond markets: The bond market is more sensitive to interest rates, and the clear space for rate cuts will push long-term U.S. Treasury yields further down; the U.S. stock market will maintain resilience under the dual logic of 'earnings recovery' and 'policy easing', but growth stocks may outperform value stocks, as growth stocks have greater elasticity to falling interest rates.
It is important to be vigilant that if subsequent economic data (such as inflation and employment) show unexpected changes, the market’s expectations for the pace of rate cuts may be revised, leading to fluctuations in asset prices.
3. Strategic insights for traders: Focus on the pace rather than betting on unilateral moves
For small fund traders, Waller's statement provides a clear strategic direction:
Abandon the mindset of 'betting on a one-time rate cut' and focus on the pace points of the Federal Reserve's policy implementation, such as the subsequent statements from the monetary policy meetings and the release of inflation data, relying on event-driven approaches for tactical operations;
In cryptocurrency trading, the Federal Reserve's interest rate decisions can be used as a core reference indicator. When expectations for rate cuts heat up, traders can take long positions in mainstream coins for the medium to short term. When a 'pause on rate cuts' signal appears, profits should be taken promptly while strictly enforcing risk control rules, ensuring that a single position does not exceed 10%-15% of total capital;
Avoid high-leverage speculation, as in a 'gradual rate cut' environment, asset price fluctuations are more likely to be volatile, and high leverage can easily trigger stop losses due to short-term fluctuations, eroding the principal instead.
In summary, Waller's statement clarified the 'direction' and 'pace' of the Federal Reserve's interest rate cuts, and the market will shift from 'betting on the timing of rate cuts' to 'digesting the pace of rate cuts'. For traders, it is crucial to align with policy trends while maintaining rationality, relying on the flexible advantages of small funds to make tactical allocations, which is the core of seizing the opportunity of this policy shift.
