2025 begins with a series of dramas in the US financial sector. The policy tug-of-war between the Federal Reserve and the White House is quietly rewriting the trend of global asset markets.

**US Debt Dilemma: An Unsolvable Dead Loop**

The numbers are brutal. The $36 trillion US debt has surged by $1 trillion in just three months. Annual interest payments alone amount to $882 billion, exceeding the entire defense budget. This is not an illusion but real debt pressure. Meanwhile, the US economic growth momentum is weakening—unemployment caused by the AI revolution has already begun, with 55,000 layoffs just last year.

Traditional economic stimulus measures have been exhausted. Printing money and easing liquidity has become the only seemingly viable solution, even though everyone knows it’s just drinking poison to quench thirst.

**Policy Tug-of-War: The Dilemma of Rate Cuts**

The White House is getting anxious. To stabilize the market and employment, the government is pressuring the Fed to cut rates as soon as possible. But the Federal Reserve Chair has his own concerns—cutting rates easily triggers inflation rebound, which would undo the efforts of five rate cuts in 2024. Not cutting rates could ignite a debt spiral at any moment, leading to a market crash.

CME futures data says it all: the probability of a rate cut in March has soared to 89%. The market is celebrating prematurely.

**Asset Market Honeymoon**

Liquidity feast has already begun. Gold ETFs have been pouring in $3.4 billion recently, hitting a record high. Bitcoin broke through $93,000, and Ethereum is also rising along with it. These "inflation-hedging assets" have become investors’ safe havens.

It looks great, but the underlying logic is quietly changing—five rate cuts in 2024, but possibly only two in 2025. US bond yields are fluctuating repeatedly, and overseas investors are starting to watch cautiously. No one is in a rush to buy US bonds anymore. The cost of policy swings has already been evident: a single policy reversal once caused 270,000 margin calls and evaporated $920 million in funds.

**Risk Checklist**

High leverage trading is especially dangerous in this kind of market. Liquidity seems ample, but once sentiment reverses, leveraged positions can be liquidated instantly. When the market goes crazy, even traders will cut their own positions.

**How to Respond**

First, pay close attention to every statement from the Federal Reserve. Policy signals change, and quick reactions are necessary.

Second, inflation-hedging assets are the main players in this cycle. The logic behind holding gold and Bitcoin is solid.

Third, control risk exposure. Now is not the time to increase leverage.

While rate cuts do bring liquidity, where that liquidity ultimately flows depends on market sentiment. Whether the crypto space can fully capitalize on this wave of benefits or become the next victim depends on whether you have proper risk management in place.