Recently, a decision by the Federal Reserve to cut interest rates actually triggered intense market volatility.

After the Federal Funds Rate was lowered by 25 basis points, U.S. Treasury yields instead quickly surged to a high of 4.2%. Behind this seemingly contradictory phenomenon lies a deeper issue—according to the dot plot data, the Fed may only implement this one rate cut before 2026. The market quickly realized: this is not genuine easing policy; rather, it appears to be quietly tightening.

Political pressure is also intensifying. The topic of a $2.5 billion overspend in the Fed building’s operational budget has been brought up again, becoming leverage for pressure. With only five months remaining in the current chair’s term, political influence has surfaced, raising questions about the Fed’s independence. Strategists are warning: if long-term yields continue to rise to 4.5% or higher, the combined effect of inflation expectations and risk premiums could cause significant market shocks.

For the cryptocurrency market, this uncertainty amplifies volatility. Tensions in traditional financial markets are directly transmitted to digital assets, and investors’ risk appetite declines accordingly. The end of the rate-cut cycle means reduced liquidity support, marking an important turning point for markets that once relied on loose monetary conditions.

The key question now is: can the Federal Reserve find a balance between political pressure and policy independence? The direction of the Treasury market will directly determine the performance of risk assets in the coming period. For investors holding crypto assets, monitoring U.S. Treasury yields is essentially watching a barometer of market liquidity.