This week, during the East 8 Time Zone, Christoph Balz, an economist at Commerzbank, publicly stated that after the Federal Reserve completes its initial policy shift, it is unlikely to rush into further rate cuts. This judgment quickly fermented across both macro and crypto channels. The Commerzbank report emphasizes that the current interest rate level is closer to the high end of the so-called "neutral interest rate range," making it difficult for the next monetary policy step to either tighten significantly or loosen quickly, leaving the market in a state of limbo. For the crypto market, on one hand, investors are still collectively betting on a more accommodative liquidity environment next year, while on the other hand, prices are repeatedly reshuffling within a high volatility range, exacerbating the sense of disconnection between short-term sentiment and long-term narratives.

Interest Rates Stuck at the High End of Neutral: Accommodative Expectations Forced to Rearrange

● The neutral interest rate range is generally understood as a level of interest rates that neither significantly stimulates economic overheating nor notably suppresses growth. When Commerzbank points out that "current rates are closer to the high end of the neutral range," the implication is that the policy rate still carries a certain demand-suppressing tone, but has retreated from a truly tightening state. This subtle position prevents the market from seeing a complete relaxation and makes it difficult to fully trust bets on high-growth assets.

● Within this framework, the Federal Reserve lacks the motivation to continue aggressive rate cuts in the short term. Although inflation has receded, it remains sticky, and employment has not shown systemic deterioration, which means that decision-makers are more likely to extend the "wait-and-see period" near current high levels, trading time for space rather than using larger rate adjustments to gain certainty. This strategy, while controlling risk, also prolongs the time high rates suppress asset valuations.

● The market had previously leaned towards pricing in "rapid easing," embedding relatively optimistic liquidity expectations from interest rate swaps to risk asset valuations and then to the beta premium in the crypto sector. Commerzbank's judgment is not the only voice but reinforces the consensus that "the pace of easing will be slower than priced in," forcing some funds to lower their expectations for the pace of rate cuts, reassess the safety margins of high-valued assets, and adopt a more conservative stance on options and leveraged positions.

Countdown to Powell's Term: The Invisible Boundaries of the Policy Window

● According to publicly available information, Federal Reserve Chairman Jerome Powell's term is expected to end in May 2026, providing a clear political and personal cycle boundary for current and future policy choices. Within this window, he needs to leave a trace that can be historically verified between "anti-inflation legacy" and "avoiding a hard landing." Monetary policy is no longer just a technical choice; it is also a personal reputation project.

● Under a limited term, the pressure to maintain a balance between inflation and employment is further amplified. If he cuts rates too quickly in the latter half of his term, and inflation rises again, it will directly impact his evaluation of "successfully taming inflation." However, if he maintains high rates for too long, economic slowdown or even worsening unemployment will similarly undermine his policy legacy. This dual constraint makes Powell more inclined towards a gradual and data-dependent approach to rate cuts rather than providing a clear easing path in advance.

● Around this "term window," the market naturally constructs various trading narratives: some bet that the latter part of the term will lean towards maintaining growth, while others believe he will stick to a hawkish stance to prevent failure. However, in the absence of confirmed information, any specific extrapolation regarding the "timing of the last rate cut" is highly speculative. Rational funds are more inclined to view the term as a risk range rather than a precise timetable, gradually adjusting in segment positions and duration allocations rather than making directional bets based on a single point in time.

Rates Not in a Hurry to Cool Down: Frontline Testing of ETH and Risk Appetite

● On the frontline of asset pricing, technical analysts have begun to provide more aggressive price assumptions for high-volatility varieties. Some viewpoints suggest that if interest rate expectations continue to shift from "rapid easing" to "slow decline," ETH may pull back to around $2250. This judgment comes from a single technical analysis source, reflecting more on graphical structure and volatility perspectives rather than fundamental consensus, but it is enough to tug at the nerves of sentiment-sensitive funds.

● High-elasticity assets typically react more violently to changes in interest rate expectations. Ethereum and its ecosystem assets have taken on the role of amplifying risk premiums during the past liquidity cycle. When expectations for a lower discount rate are weakened, even the most imaginative long-term cash flows will be compressed in pricing. This is why, after the interest rate path shifts from "rapid decline" to "slow adjustment," Ethereum often adjusts its price earlier and more significantly than traditional assets.

● For crypto investors, when "possible deep declines" and "long-term easing expectations" coexist, position gaming becomes a hedge about time and patience. Some traders choose to exploit short-term downside space using futures and options amid high volatility, while others prefer to build positions in batches and extend holding periods, attempting to ride out the interest rate noise. Regardless of the path taken, how to control leverage and manage liquidation risk is becoming a more core practical issue than simply being bullish or bearish.

Exchanges Launch New Products, Funds Exceeding One Billion: Micro-Leverage Hedging Macro Hesitation

● In contrast to the macro-level caution, trading platforms continue to ramp up risk tools on the product side. Huobi HTX has launched BIRB and SOMI perpetual contracts, while Gate has added traditional equity targets like Microsoft in its stock section, actively bridging trading interfaces between crypto and traditional assets. Against the backdrop of unclear interest rate expectations, these new products provide more vehicles for speculation and hedging, allowing funds to achieve cross-asset and multi-directional layouts on a single platform.

● Within the same time dimension, alternative asset platforms are also amplifying leverage and diversification effects. Information from a single source indicates that StandX platform's 24-hour trading volume has surpassed $1 billion, with a significant increase in precious metals trading volume, indicating that at the tail end of high rates, some funds are choosing to switch back and forth between traditional "safe-haven assets" and crypto high-elasticity assets, seeking arbitrage opportunities by leveraging the liquidity characteristics of different markets rather than making one-sided bets on a particular type of risk asset.

● The product-level increase in leverage and asset diversification creates a subtle misalignment with the macro-level tone of "cautious rate cuts." On one side, central banks are deliberately slowing the pace of easing to avoid overheating asset prices; on the other side, exchanges are amplifying the risk exposure that a single unit of capital can leverage by launching more contracts and cross-market targets. For investors, this misalignment not only provides more strategic space but also inadvertently raises the possibility of systemic volatility amplifying collectively in extreme situations.

Crypto Games Under Regulatory Shadows: Pricing Discounts from Judicial Uncertainty

● While monetary policy remains undecided, a series of controversial cases by the U.S. Department of Justice in crypto enforcement is casting an additional shadow over the industry. Enforcement actions against certain crypto companies and practitioners have been criticized by the industry for their ambiguous standards and inconsistent applications, resulting in a high degree of uncertainty in the regulatory boundaries in practical operations. This uncertainty is not limited to individual cases but spills over into the compliance expectations of the entire industry.

● The coexistence of accommodative monetary expectations and a strict enforcement environment significantly constrains the pace at which institutional funds enter the market. Even if interest rates gradually decline and the liquidity environment improves in the future, if the judicial and regulatory framework remains tough and opaque, many institutional investors with heavier fiduciary responsibilities will still choose to wait and see or only make limited allocations in areas with clearer compliance, thereby weakening the simple logical chain of "rate cuts = large influx of funds."

● Macroeconomic rates, regulatory risks, and liquidity risks are presenting a cumulative effect in the current cycle. High rates raise the opportunity cost of crypto assets, judicial uncertainty brings potential compliance discounts, while the diverse leveraged products from exchanges amplify the chain reactions during sudden liquidity contractions. Together, these three factors constitute the "discount factor" in current pricing and are one of the fundamental reasons why, even with forward easing expectations, crypto assets frequently experience deep pullbacks and high volatility.

Finding New Risk Balances in an Unwilling Rate-Cutting Era

The Federal Reserve's reluctance to further cut rates contrasts sharply with the crypto market's ongoing pursuit of high-beta risk assets, forming the core contradiction of the current cycle: on one side, the central bank is attempting to use time to mitigate risks, while on the other side, funds are accelerating their advance to test boundaries along the price curve. For investors, simply betting on easing next year is no longer sufficient to support decision-making; it is also necessary to track the evolution of judgments regarding the "neutral interest rate range" and how the May 2026 term node is continuously reassessed in public opinion and policy discussions. In the phase of high rates and regulatory uncertainty, underestimating leverage can lead to exponentially amplified costs, and short-term gaming without a clear risk control framework may very well lead to a total loss in an unexpected volatility event. Learning to redefine win rates and drawdown tolerances in an environment where rates have not fully cut may be the most important investment skill of this era.

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