The Fed's actions have actually been made clear - the balance sheet reduction has stopped, and the balance sheet expansion is coming.

In other words: the money printing machine has to start again. Some analysts expect that at the interest rate meeting as soon as next week, the Fed may announce a "reserve management purchase" plan to eat about $20 billion in short-term Treasury bonds every month. More importantly, they already have action on their hands: the liquidity launch in early December was the most intense since the outbreak of the epidemic in 2020.

Once this operation is opened, it will not brake easily. Just like the previous cycle of interest rate hikes and interest rate cuts, it is a complete set of combination punches.

Let's look at the market side. From October 11 to now, the mood index has been soaked in "fear" or even "extreme fear" almost every day, for nearly a month - 29 days! This kind of continuous repression is rare in historical records.

Many people panic when they see fear, but think about it from another angle: why panic in the market for so long?

The answer is simple: grind. Grind the mentality of retail investors to the brink of collapse, until you suspect that the rebound is fake. Fear itself is not the end, it is the process of redistributing chips - some people cut their meat and leave, and some people silently receive the goods.

This round of washing is even more fierce than Bitcoin's two previous 30% pullbacks: it drags on longer and the emotions are more ruthless. But on the other hand, once the market really starts, the explosive power may be more intense. The market has always been like this, and there is often a turning point at the end of despair.

Liquidity is coming back, and emotions are already in place. What to do next, continue to observe on-chain data and policy signals.