💧 Is the market's "water shortage" coming to an end?

On December 1st, the Federal Reserve's quantitative tightening (QT) officially came to an end. Don't underestimate this move—it's not just about "no more draining"; it could very well be a signal of a major policy shift. Now the market is all eyes on the next step: will a rate cut really happen?

What does this mean for our wallet?

In simple terms, the era of "cheap money" might be returning. How will different assets react?

🌟 Cryptocurrency over here
Liquidity is the lifeblood of this market. Cathie Wood of ARK Invest has long stated: as soon as money is loosened, the crypto and AI sectors are bound to take off. A more radical view suggests that if the Federal Reserve truly engages in quantitative easing, the rise of Bitcoin could be astonishing.

🌍 What about bulk and emerging markets?
History does not lie—during the six months following the last tapering, commodities like crude oil and copper saw an average increase. As dollar liquidity increases, capital naturally flows to emerging markets with faster economic growth in pursuit of higher returns.

⚠️ But don't celebrate too early

The market never moves in a straight line, there are a few pitfalls to watch out for:

· Stopping tapering ≠ crazy interest rate cuts
The former president of the New York Fed made it very clear: stopping QT is mainly to ensure that the banking system has enough reserves, which is a separate issue from the space for interest rate cuts. The tightness of monetary policy still depends on how interest rates move.

· The Federal Reserve is also arguing internally.
Will there be a rate cut in December or not? Internal opinions are not unified. Powell himself has said that a rate cut in December is "far from a done deal." Although the market has given more than an 80% probability, the official stance is ambiguous, and the game of negotiation is not over yet.

· Inflation is a stubborn old problem
Although inflation has eased from its peak, the core PCE price index is still above the 2% target line. If the data fluctuates, the Federal Reserve's rate cut plans could be disrupted at any time.

💎 Finally, let me say one thing

The improvement in liquidity is indeed good news, but it is just the "soil". Which assets can truly grow depends on whether the fundamentals are solid and whether the overall environment is conducive. Being optimistic is fine, but one must stay clear-headed.