Trump urges the Federal Reserve to cut interest rates, is ETH about to harden again?

Source: Talking About Li and Outside

Ethereum has fallen from around $4,100 last December to about $1,700 in March this year, a decline of about 59% in just over three months. During this process, many who were originally optimistic about Ethereum gradually lost patience and became increasingly disappointed and pessimistic…

However, with ETH rebounding to the $2,000 mark yesterday (March 19), it seems to have rekindled hope for some. Many partners who were trapped looked at Ethereum at $2,000 with eyes full of desire and excitement, eagerly sharing the news with each other.

1. Is ETH going to harden up again?

As for whether ETH can really harden up this time, I don't know. Because currently, ETH is still in a downward trend, let's focus on a few aspects:

First is the technical aspect. Let's see if it can close around $2,200 this month (March). If it can successfully reclaim and stabilize at $2,200, then maybe we will have a chance to see higher levels next. Otherwise, just continue with what you were doing. Additionally, it is said that Standard Chartered's analysts have lowered their target price for ETH in 2025 from the original $10,000 to $4,000.

Second is the news aspect, such as the progress of the Pectra upgrade, the approval progress of ETF staking, the adoption rate by institutions (like the continuous accumulation of WLFI, opportunities in RWA applications), and the positive or negative impacts brought by the Ethereum Foundation and Vitalik personally, etc.

Third is the data aspect, such as the inflow/outflow of ETF funds, the activity level on the Ethereum chain, changes in the supply held by top non-exchange addresses, etc.

As for the reasons behind this market rise, we won't play the hindsight game here. There are already many reasons summarized online, such as the macro reasons mainly being the signal released by the Federal Reserve early this morning (Beijing time, March 20), which indicated that interest rates would remain unchanged (as expected), but the pace of QT (Quantitative Tightening) would slow down, which the market sees as a positive signal. As shown in the figure below.

In simple terms, the fact that the Federal Reserve's interest rates remain unchanged at 4.25%-4.50% has long been digested by the market, but the reduction in the balance sheet is beyond the original expectations, which has reignited some confidence in the market and provided some motivation or reasons for the market to rise.

So, can Ethereum continue to be bought on dips now?

Currently, the price of ETH is equivalent to the level in October 2023, so many people might tell you that now is a good time to buy on dips, as Ethereum has dropped 60% from its high of $4,100. But you need to think about one more thing: if (this is just a hypothesis) ETH drops another -60% from -60%, can you accept it? If you can accept or bear this possible risk, then you can buy at any time.

Since it's about buying on dips, this so-called "low" may have different definitions for different people. What is your definition?

Many people anchor to the price of $4,100, so they think that the current Ethereum at $2,000 is a low price. But if you anchor to the lowest price of $800 in 2022, then the conclusion may be completely different.

Selling on highs is actually similar. If you anchor to the belief that Ethereum will eventually reach $10,000, then holding Ethereum at $2,000 or being trapped with a cost of $3,000, what is there to be pessimistic about?

Therefore, questions like (Should I buy now? Should I sell now?) are not very meaningful if you directly ask others. If you cannot find your own anchor and cannot strictly control your position (position management + risk management), then all your questions may be in vain, and others cannot provide you with the answers or results you need.

As for myself, I always believe that as ordinary people investing in a field, we must form our own strategies or methodologies, such as:

• Even if I am long-term bullish on Bitcoin and always adhere to a coin-based strategy, I still choose to take necessary profits during a bull market (i.e., selling a portion of my position) to optimize capital efficiency and increase my long-term BTC reserves as much as possible.

• Although from a technical or market perspective, I could quickly increase my returns by leveraging in trading operations, I still chose the slowest method of spot trading (just holding coins).

• Compared to spending over an hour each day watching the market, I prefer to spend 10 minutes a week simply checking the market and then devote the remaining time and energy to doing things I enjoy, rather than exhausting myself with frequent trading or getting caught up in trading.

• Always keep yourself in this field, always have chips to stay at the table, is easier to succeed than leaving all your chips on the table to gamble. Only those who persist until the end can have a higher probability of getting results.

• Don't let yourself fall into extreme survivor bias. We often hear about people who become rich overnight, but rarely hear about the thousands who try to do the same and go bankrupt.

• In fact, when it comes to investing, most people tend to overestimate what they can achieve in a year while underestimating what they can achieve in ten years. If you can reasonably customize a ten-year plan and stick to executing it in phases, then I believe you will definitely outperform most people.

2. Trump urges the Federal Reserve to cut interest rates

We mentioned QT earlier. If we look back at history, we can find that since the Federal Reserve started QT in 2022, it has withdrawn hundreds of billions of dollars from the market each month. Now (starting April 1), the scale of balance sheet reduction will decrease from $25 billion to $5 billion, which, from a certain perspective, means that the Federal Reserve's monthly withdrawal amount has suddenly decreased by four-fifths, effectively injecting some liquidity back into the market (if we compare interest rate cuts to a strong medicine, then QT can be considered a tonic).

And today (March 20), there is another interesting thing: Trump posted a tweet on Truth Social (a social platform similar to Twitter under Trump Media Technology Group) urging for interest rate cuts. He believes that with adjustments to tariff policies, the U.S. economy will need lower interest rates to adapt to the changes. As shown in the figure below.

Regarding Trump's interest rate cut sentiment and the potential impact of the Federal Reserve's interest rate cuts on the crypto market, we have already discussed some of this in previous articles (such as March 16, March 12, March 11, etc.), so we won't elaborate further here. Interested partners can refer back to the historical articles of Talking About Li and Outside.

3. Continuing to discuss investment style issues

Next, let's continue discussing investment style issues based on the previous article (March 17):

A few days ago, I saw a comment from a partner asking: Can UNI still be held?

When I saw this comment, my first reaction was to copy the reply I had given to the same question a few days ago and share my thoughts with this partner. But I found something interesting: the partner who raised the above question had already asked me this question before, and upon checking their comment history, I discovered that they had repeated this question about UNI to me 8 times in the past six months. As shown in the figure below.

It is clear that this partner has likely been trapped in UNI for quite a while and may be feeling a bit pessimistic. I suspect that besides leaving comments on Talking About Li and Outside, they might also be asking the same question under various other bloggers but have yet to get the results they want.

To be honest, if you encounter a problem (loss) and do not take the time to reflect, summarize, and review yourself, but instead seek help from others (strangers) hoping they can provide you with a perfect result, relying on others to change your fate is quite difficult.

Everyone is chasing money and likes to pursue it, but some people seem to struggle to understand a basic principle or logic: chasing money is not the most important thing; what matters is developing certain (or several) money-making habits that suit you.

Many people only think about making quick money or betting small to win big, and then they hope to establish this goal more on the help of others (like some KOLs, bloggers, etc.). However, what others do and what you should do are completely different concepts. We have mentioned this issue multiple times in previous articles, such as the significant differences in background, experience, and risk tolerance among different people, as well as the varying thought models, knowledge, perspectives, and interests of each individual.

Others' investment methods may not be suitable for you. The best approach should be to learn and understand others' investment ideas or logic, and then, based on that, combine it with your own situation to draw parallels and form a set of investment methodologies or systems that suit you.

Moreover, in this process, avoid being overly ambitious. For example, in the crypto field that interests you, if you want to stay ahead, you need to continue learning (learning + notes + thinking) during the investment process. Learning can be achieved through various means or channels, such as:

• Some people like to follow a bunch of bloggers on Twitter and scroll through various news every day.

• Some people prefer to join various chat groups and scroll through various news daily.

• Some people like to leave comments everywhere, asking others various questions.

• Some people prefer to use ChatGPT directly to get one or several answers.

• And so on…

Regarding how to learn effectively, I remember that in previous articles on Talking About Li and Outside, I also summarized some of my personal experiences or methods, so I won't elaborate further here. I just want to remind you of one important point: any information needs to be checked and verified; don't trust everything you see casually.

The purpose of investing is to earn more money, but you must learn to make your money work for you, rather than becoming a slave to money. In any investment field, no one will take you to wealth for no reason, and the market's money won't just be there waiting for you to pick the fruit. We must pursue those methods that suit us and are correct for us, whether it's spot trading, contracts, airdrops, IPOs, arbitrage… or any other type of play. You can try them, but during the process, you must think clearly: in a PvP game, what do you have (or what unique methods do you possess) that allows you to earn money from others' pockets?

The so-called unique methods can be divided into two types:

One is a unique strategy (held by a small number of people, not by the majority), where this uniqueness is mainly reflected in scarcity and leadership. For example, you develop a set of indicator systems that can accurately predict market trends with high probability, allowing you to gain profits ahead of others. Or you can obtain some differentiated news earlier than others, filter out effective information from a massive amount of data faster than others, or you have a large amount of traffic that you can use to lead or call trades, etc.

The other is a general strategy (held by the majority, but only a few can execute), where this uniqueness is mainly reflected in psychological and cognitive leadership. For example, seasoned investors earnestly advise you to dollar-cost average into Bitcoin at low prices and hold on patiently for good returns, but you still unhesitatingly go all in on various altcoins or directly swap your originally purchased Bitcoin for various altcoins because you believe altcoins will have greater price increases and quicker returns.

In summary, many times, some people, after seeing others' brilliance, always hope to directly possess it while ignoring their true selves. In any investment field, merely trading is not enough (for example, buying whatever others tell you to buy or buying whatever is hot). We need to learn to create and form our unique methods. For ordinary people, most find it difficult to succeed casually after entering a new field. The first few attempts may fail, but failure often means gaining more experience than others. How to effectively utilize your experience (combining some methods from others) to establish your investment methods is the correct way to accumulate wealth.

That's all for today. The images/data referenced in the text have been added to the Notion of Talking About Li and Outside. The above content is just personal viewpoints and analyses, intended for learning records and communication purposes, and does not constitute any investment advice.