Today, the silver market experienced a strong surge, with prices climbing up against short positions, causing a number of shorting traders to be knocked down.

The key driver behind this matter is that the market is betting on the Federal Reserve lowering interest rates. The probability on prediction platforms once surged to over 85%. At the same time, there are also rumors that the Bank of Japan may raise interest rates, which has caused many funds engaged in carry trades to start panicking.

On the surface, it seems that precious metals are in a frenzy. However, for those of us involved in crypto, there are a few points worth pondering hidden within this.

**The whole world is waiting for liquidity**: Even silver, a traditional market, can experience a short squeeze due to tight inventory and speculative expectations, which shows how hungry various funds are for easing policies. Money is stuck with nowhere to go, and when it sees a bit of opportunity, it rushes in; this sentiment itself is very dangerous.

**Hedging has turned into chasing gains**: The surge in silver is not just due to people seeking refuge, but more because it is sensitive to interest rate cuts and stimulus policies. This logic is essentially the same as that of cryptocurrencies, especially assets like ETH that represent emerging economies. When expectations of interest rate cuts arise, the cost of holding risk assets decreases.

**East-West policies are clashing**: I mentioned last time that the Bank of Japan might raise interest rates, which would cause arbitrage funds to flow back, not a good thing for the market in the short term. But now the voices for the Federal Reserve to cut interest rates are louder, and these two forces are tugging at the flow of funds globally. In the short term, it will definitely be tumultuous, but looking ahead, if the major Western economies start to loosen monetary policy, it will have a greater significance for the overall risk asset market.

What does it have to do with the crypto market?

Very straightforward - don't view the market in isolation.