#美SEC促进加密资产创新监管框架 Yesterday, $BTC and $ETH both plunged, and many people are confused—wasn't it said that rate cut expectations are heating up? So why are they still dropping?

The core issue is still liquidity. If you look at global market trends, you'll find the answer.

Rate cut expectations are indeed increasing, but this round of positive news seems to have already been mostly priced in by the market. Financial markets are now not only eyeing a possible rate cut in December, but also having to deal with the variable of a potential yen rate hike. Recently, one-year short-term bond yields have edged up slightly. Normally, if rate cut expectations are rising, short-term bond yields should keep falling—after all, short-term bonds are most sensitive to interest rates. Now that yields are climbing instead, it suggests the market may have already priced in the December rate cut.

What’s more interesting are the 10-year and 30-year long-term bonds. Their yields have risen significantly. If the market were truly trading on rate cut expectations, people would be buying, not selling, U.S. Treasuries. So, the long-term bond market may not be trading on the rate cut logic anymore.

There are two factors driving up long-term bond yields. First, last night's PCE data showed that although inflation in September didn’t continue to rise, it remains sticky. Concerns about future inflation naturally push long-term bond yields higher. Second, it's the expectation of a yen rate hike at play—U.S. Treasuries are being sold off, and capital is flowing back to yen assets. With the U.S. cutting rates and Japan raising them, the interest rate differential is narrowing rapidly, leading to accelerated unwinding of carry trades. As a result, both Japanese government bond and U.S. long-term bond yields are surging. Currently, Japanese bond yields are also rising quickly.

On the U.S. stock side, although the three major indices are up and the VIX has dropped to around 15, the Russell 2000 index is still falling. This indicates that short-term risk appetite isn’t actually that optimistic, even if the VIX seems calm.

To sum up: the main logic driving the market has gradually shifted from rate cut expectations to yen rate hike expectations, and capital liquidity is shifting. $BTC is also affected by this. Next week during the Asian session, keep an eye out for whether institutions continue to sell off, just like they did on Monday this week.