Nine out of ten people misunderstand the essence of rate cuts.

Many people hear "rate cut" and immediately think of a bull market, but this idea can be deadly. Even many content creators have fallen into this trap—believing that once the Federal Reserve acts, with the dollar standing firm, nothing can hold it back, and the Fed is invincible.

This kind of thinking is at best amateurish; reality has long since proven it wrong.

**Does a rate cut really have an effect? Just look at the 10-year US Treasury yield.**

A rate cut itself doesn't directly flood the market with liquidity; the key is whether optimistic expectations follow. Right now? The yields on US medium- and long-term bonds remain high, and the cost of capital stays elevated. What does this indicate? The effect of rate cuts on liquidity release is far less dramatic than imagined.

**There's also a side effect that most people overlook.**

As the global financial center, the US, once expectations of dollar depreciation emerge, capital attracted by high US interest rates will have an urge to flee. Historically, the US has often created geopolitical conflicts during rate-cut cycles, using risk aversion to lock in capital domestically. But now, the situation has changed—the US influence is waning, and this threat-based approach will be much less effective.

The result is: actual liquidity is shrinking, and the liquidity that should be generated in expectations simply isn't appearing. This is what is called structural tightening—a market condition that investors find hardest to understand and most prone to pitfalls.

Even when the fundamentals look positive, the price charts don't behave logically. That's the reason.