Global monetary policy is becoming more accommodative, bringing new opportunities to the crypto market.

1. Signs of a Global Interest Rate Cut Cycle Emerging

Recently, global monetary policy is gradually shifting towards easing. Although the Federal Reserve maintains a cautious stance, the possibility of interest rate cuts is increasing. The Federal Open Market Committee of the Federal Reserve keeps the federal funds rate target range unchanged at 5.25% to 5.50%, and plans to slow down quantitative tightening starting in June (QT). The market expects the probability of an interest rate cut in September to be close to 50%, and a cut before the end of the year has almost become inevitable.

Federal Reserve Governor Christopher Waller clarified the conditions for future interest rate cuts, stating that under stable employment market conditions, good inflation data would need to be observed for 3-5 months before considering a rate cut by the end of the year. This statement provides clearer guidance for the market.

Despite the US April CPI data meeting expectations and the labor market remaining resilient, there are already signs that a rate cut cycle is about to begin. The Federal Reserve is considering easing capital requirements for large banks, which is seen as one of the important signals for a rate cut.

From a global perspective, the interest rate cut cycle has already begun. Several major central banks have started cutting interest rates, and it is expected that the European Central Bank, Swiss National Bank, and others will also cut rates before the end of June. Against this backdrop, a rate cut in the United States is also just a matter of time.

2. Technology stocks lead the US stock market, interest rate cuts may change market style

Tech giants continue to lead the rise of US stocks. A certain chip giant reported first-quarter results for the fiscal year 2025 that significantly exceeded market expectations, with revenue increasing by 262% year-on-year and net profit increasing by 620% year-on-year. The company's stock price hit a new high, with a total market value exceeding $2.6 trillion, making it the third largest company by market value in the US stock market.

However, the gains in the US stock market are mainly concentrated in AI-related sectors, while other sectors perform relatively flat. Excluding the seven major tech giants, the returns in the US stock market are not high, and other global markets have gains close to zero. This extreme concentration in the market is not a healthy phenomenon and poses a risk of bubble.

However, the upcoming interest rate cut cycle may hedge some risks. During the interest rate hike cycle, the market tends to favor sectors with high certainty. The start of the interest rate cut cycle will enhance market liquidity and risk appetite, potentially creating opportunities for non-AI sectors, and the investment style in the US stock market may change.

3. The crypto market welcomes positive news, and Ethereum ETF is on the horizon.

In May, the crypto market experienced a strong rebound. Bitcoin broke through $71,000, while Ethereum surged over 20% on May 21, subsequently approaching $4,000. This wave of increase was mainly driven by positive news from the United States regarding the Ethereum ETF.

On May 24, regulators officially approved the 19b-4 filing for the Ethereum ETF, paving the way for the listing of the Ethereum spot ETF. Although the S-1 filing has not yet been approved, this progress indicates that the launch of the Ethereum spot ETF is a done deal.

At the same time, the FIT21 Act was passed by the House of Representatives, providing a clear definition for the regulatory framework for digital assets, which is beneficial for more crypto assets to apply for spot ETFs and develop in compliance.

The shift in the regulatory attitude towards the encryption industry may be related to the fact that both parties in the United States are using crypto assets as political leverage. Some Democratic lawmakers have begun to oppose excessive regulation, while Republicans are actively courting holders of crypto assets. This political game may accelerate the compliance process of crypto assets.

IV. Conclusion

Global monetary policy is trending towards easing. Although the Federal Reserve remains cautious, the possibility of interest rate cuts is increasing. Investors should closely monitor relevant signals and consider looking for opportunities in interest rate-sensitive assets.

The technology sector continues to lead the market, but investors should also be wary of potential bubble risks. With the arrival of the interest rate cut cycle, market styles may change, and non-AI sectors may welcome opportunities.

The cryptocurrency industry is gradually moving towards compliance, bringing new opportunities for investors. The shift in regulatory attitudes and political factors may accelerate this process. Investors should pay attention to developments in this field, but also be mindful of risk management.