#数字货币市场洞察 📉 Don't just focus on rate cut expectations when looking at tonight's drop.

Many people are puzzled: Didn't the probability of a rate cut increase? Why did the market fall instead?
The truth lies in liquidity shifts—where the money goes, the market follows.

First, let's talk about abnormal signals in the bond market.

Short-term bonds: The (1-year) yield has risen instead of falling. Normally, stronger rate cut expectations should push short-term yields lower, since short-term bonds are most sensitive to interest rates. The fact that yields are rising shows the market had already priced in a December rate cut long ago, and is even starting to doubt it.

Long-term bonds: The (10-year and 30-year) yields have climbed even more significantly. If rate cuts were truly favored, funds would be scrambling to buy bonds and push yields down, but in reality, they're selling. There are two forces at play: First, tonight's PCE data didn't show worsening inflation, but stickiness is still there, so long-term inflation worries keep investors from chasing long bonds. Second, expectations of a yen rate hike are heating up, so arbitrage funds are closing positions, selling US Treasuries, and money is flowing back to yen assets. The dollar is falling, the yen is rising, and the yield spread is narrowing faster, with Japanese government bond yields also surging.

Now the stock market.

On the surface, the three major indexes are still holding up, and the VIX fear index has dropped to around 15, so it looks pretty stable. But the Russell 2000 small-cap index is falling. This divergence shows short-term risk appetite isn't actually that optimistic—it’s just the large-caps holding up the market.

BTC? Also affected.

To sum up: The positive effect of rate cut expectations has already been squeezed out. The dominant factors now are yen rate hike expectations and liquidity shifts. Next week during Asian trading hours, watch if institutions keep dumping BTC. Don’t let this Monday's scenario repeat.

Keep watching. Don’t rush to buy the dip.