The Fed's rate cut this time caused the market to tumble dramatically. Bitcoin even wiped out all its gains from the meeting within 12 hours. What's really going on here? Actually, it's not a fundamental problem, but a play on expectations that went wrong.

**First, let's talk about why it fell so hard**

First, profit-taking funds rushed to exit. The market had already anticipated the rate cut, with the probability soaring to 95%. Large institutional investors had already built positions early last week, waiting for liquidity injections. As a result, the central bank officially announced—purchasing $40 billion of short-term government bonds each month—whales immediately started cashing out and exiting. That was the initial wave of selling pressure.

Next, hawkish signals cooled the market. Powell hinted at concerns during the press conference: the labor market remains weak, inflation is still stubborn, and the dot plot directly indicated a high probability of only one rate cut in 2026. How is that easing? When expectations were disappointed, U.S. stocks closed sharply lower.

The final straw was Oracle's earnings blowout. The second-quarter revenue missed expectations, yet they raised capital expenditure guidance, causing the stock to plunge over 11% after hours. The market started worrying that AI might have peaked, and panic quickly spread from stocks to the crypto space.

**But in the long run, this isn’t so bad**

The essence of this drop is simply "disappointment after expectations were realized." The rate cut had already been priced in, and traders had positioned themselves in advance. Those who needed to sell or exit did so. Hawkish signals combined with concerns over AI stocks triggered a profit-taking wave.

However, the big picture hasn't changed. The central bank has already cut rates three times in a row, and in the next 30 days, it will start purchasing $40 billion of government bonds monthly, likely continuing for several months. Rate hikes? Not likely to become the main theme. The economy is expected to remain stable through 2026, and the weakness in the labor market actually leaves room for future easing.

In other words, the liquidity environment in 2026 will definitely be better than in 2025, but this expectation isn't fully reflected in current prices yet. The current decline is more about expectations running too far ahead, with reality lagging behind. The market needs time to digest this, but the trend remains intact.