Trump's Obsession with Interest Rate Cuts: Make America Cut Rates Again? Make America Great Again?
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Trump's Obsession with Interest Rate Cuts: Make America Cut Rates Again? Make America Great Again?
Trump said: Make America great again!
Navigating Web3 tides with focused insightsArticle source: Words Beyond the Talk
In our previous article, we re-examined market development. Regarding current market sentiment, many people seem to be developing renewed hopes for rate cuts (by the Federal Reserve).
The last time the crypto market significantly benefited from rate cuts was starting in 2020. Before the outbreak of the COVID-19 pandemic, the federal funds rate (the rate adjusted by the Fed) wasn't high—only between 1.5% and 1.75%. However, to counter the shock brought by the pandemic, the Fed conducted two emergency rate cuts within one month: the first cut by 50 basis points (0.5%), the second by 100 basis points (1%).
As a result, the federal funds rate dropped directly to 0%–0.25%, meaning borrowing became easier than ever before. With lower borrowing costs, massive liquidity flooded into markets (including the crypto market), pushing up prices of various risk assets. This became one of the key drivers behind the bull market of 2021.
1. Trump’s Obsession with Rate Cuts
A BBC report at that time (March 16, 2020) was quite interesting: as the Fed made an emergency cut to zero interest rates—“using up all its ammunition” at once—Trump, who had previously criticized Powell for being “ineffective,” surprisingly changed his tone, praising it as “great,” “very good news,” and saying it “made me very happy.” As shown in the image below.
From this report, it seemed clear that Trump has always had a certain “obsession” with “rate cuts.”
Five years have passed. Recall that earlier this year (2025), after Trump returned to office as president, he publicly stated: “I understand interest rates better than Fed Chair Powell.” As shown below.
However, judging from Trump’s actions over the past two months and their significant impact on markets (including U.S. stocks and the crypto market), it seems the Fed still hasn’t followed his wishes. This is exactly what many in the market are speculating about now—that the reason Trump is stirring up so much turmoil is precisely to “force” the Fed into cutting rates.
2. The Impact of Rate Cuts on Markets
Let’s return to the topic of the crypto market.
It was precisely because of the 2020 rate cuts that ultra-low borrowing costs and massive liquidity set the stage for a new bull cycle.
Yet, if we look back at historical price movements, we can see that the effects of those rate cuts didn’t immediately show up in the crypto market. The bull market didn’t erupt until 2021. This reflects a point we’ve made before: the crypto market primarily benefits from “excess liquidity.” That is, large-scale liquidity resulting from rate cuts first flows into traditional markets like U.S. equities, and only afterward does excess liquidity spill over into smaller, higher-risk markets like crypto.
This situation is gradually changing, however. As more major institutions have deeply entered the crypto space in recent years, the crypto market has become increasingly synchronized with U.S. stocks. Once there is abundant liquidity in the market, some capital may now enter the crypto market earlier.
By 2022, the prolonged low rates (zero interest) led to soaring inflation in the U.S., with CPI reaching a 40-year high. Consequently, the Fed resumed a new round of rate hikes—six times in 2022 alone (in March, May, June, July, September, and December). By July 2023, they had raised rates eleven times total, bringing the federal funds rate to 4.33%–5.50%, the highest level in 20 years. As shown below.
From a timeline perspective, the period of 2022–2023 coincided exactly with the crypto market’s latest bear market.
Entering 2024, the Fed began cutting rates again (starting a new easing cycle in September 2024), injecting fresh liquidity into the market. Combined with macro narratives such as ETF approvals and internal developments like the BTC ecosystem, the crypto market entered a new bull phase.
We can also observe from the continuous growth of stablecoins that significant capital started flowing into the market around that time. What followed is history: the massive boom of MemeCoins (price speculation), BTC breaking the $100,000 milestone and continuously setting new all-time highs…
So how will the script unfold next? I don’t know. We should first pay attention to the Fed’s upcoming meeting on March 19, as shown below.
Still, based on current forecast data, expectations for a rate cut by June remain relatively high, as shown below.
Although expectations for rate cuts this year persist, we can already see key differences between the 2020 and 2025 rate-cut cycles. Besides different starting interest rates, the biggest difference lies in the pace: the previous round was rapid and aggressive, while the current easing appears to be gradual and slow—unless another major black swan event occurs, such as the U.S. stock market circuit breaker we mentioned in our article on March 11.
As noted earlier, the crypto market thrives mainly on excess liquidity. Even if this dynamic might evolve somewhat in the future, if the rate-cut process remains slow and incremental, the current crypto market rally may also progress gradually. For retail investors, trading could become more challenging and require greater caution—unless extreme conditions emerge, such as:
On the upside: fulfillment of the other two core factors we previously outlined (narrative, macro, policy)—either a new breakthrough or innovation within the crypto space (currently not visible), or a major policy tailwind, particularly from the U.S. (and of course, even bigger would be if a certain Eastern country lifted restrictions—but that seems impossible for now). On the downside: a black swan event worse than the tariff wars, capable of crashing the entire market.
Trump says: Make America Great Again!
Retards say: Viagra works too, as long as we get rate cuts!
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