Does a rate cut really mean Favourable Information? Let's uncover the veil of this financial mystery together.

In theory, a rate cut by the Federal Reserve should be a positive signal. It essentially conveys the message to the market that "funds should flow more towards investment." This should stimulate a rise in the stock market and the cryptocurrency market, as more funds would pour into these areas.

However, reality often deviates from theory. The market often experiences unexpected declines after interest rate cut announcements. This phenomenon can be likened to: even if one receives a year-end bonus, people may prioritize paying off debts rather than immediately increasing consumption.

The complexity of market reactions stems from its inherent human characteristics. Market participants often react in advance to anticipated interest rate cuts, which is referred to as "expectations have been digested." When the interest rate cut actually occurs, early investors who bought in may choose to take profits, leading to a price decline. This leaves many novice investors feeling puzzled.

In the cryptocurrency market, this reaction is often amplified. Due to the widespread presence of high leverage trading, market fluctuations can be more intense. Investors need to be particularly cautious when using leverage, as it can lead to greater profits but also more severe losses.

Overall, understanding the market's reaction to interest rate cuts requires considering multiple factors, including expectations, sentiment, and leverage effects. Investors should be cautious of simplistic logic like "rate cuts equal increases" and should analyze market dynamics more comprehensively.