After the CPI data is released, the expectation of interest rate cuts has once again become the market focus. What does this mean for the cryptocurrency market? Let me break down the underlying logic.

First is the expansion of liquidity. Once the Federal Reserve begins a rate cut cycle, more money will flow into the market and become cheaper. Funds that were previously circulating in traditional finance will naturally tilt towards high-volatility assets like Bitcoin and Ethereum. This is nothing new; historical data has long proven this.

Second, the US dollar will come under pressure. Rate cuts → US dollar depreciation, this is an iron law. Cryptocurrencies are also widely used by many investors as a tool to hedge against dollar risk. When the dollar weakens, purchasing power increases.

The third layer is the recovery of risk appetite. Poor economic data combined with signals of rate cuts will lead institutions and retail investors to reassess risk-reward ratios. Although cryptocurrencies are volatile, their high return potential becomes particularly attractive at this time.

Finally, don’t forget the emotional aspect. Once the overall financial market's risk sentiment turns optimistic, speculative funds will flock in, and the crypto market has always been the favorite playground for such funds.