Federal Reserve officials have recently been sending conflicting signals about interest rates—some calling for rate cuts, others maintaining a hawkish stance. This appears to be "internal discord," but in reality, it conceals a carefully orchestrated game of expectation management. Three major hidden risks are quietly eroding the profit margins in the crypto space.

**Market Self-Deception**

How many are betting on more than three rate cuts this year? Probably far more than the Fed officials imagine. The official dot plot has been clear for a long time—most decision-makers expect fewer than three cuts throughout the year. Yet the market refuses to buy this, and speculation and betting continue as usual. Where is the problem? The core inflation simply refuses to come down, the employment market remains resilient, and geopolitical black swans could take off at any moment. How dare the Fed truly accelerate rate cuts? Therefore, the "expectation gap" is widening. When reality collides with expectations, the rebound space will be severely compressed.

**Vulnerability of the Crypto Market Is Exposing**

How sensitive are high-risk assets like Bitcoin and Ethereum during a Fed tightening cycle? Historical data makes it clear—volatility is amplified several times. Currently, global liquidity is already tightening, yet the crypto world is still clinging to the hope of rate cuts as a lifeline. If this expectation is disappointed or delayed, high-risk assets will be the first to suffer. Remember UST and LUNA? That was a structural breakdown during a liquidity drought in the dollar market. Many believed in the promises of stablecoins back then, only to have their positions wiped out in an instant.

**False Prosperity Is Coming**

Monetary policy transmission has a lag, and markets often fall into a "false prosperity" at the end of tightening cycles. The recent rebound in the crypto market is largely driven not by fundamentals improving, but by continuous inflows into spot ETFs and technical optimizations. But if inflation data jumps again, or the Fed turns around and signals a more hawkish stance? That will mark the end of the "last carnival" in crypto, and a sharp correction in risk assets will follow.

**Living Is More Important Than Making Money**

The real threat isn't whether the Fed is divided internally, but that the market only wants to hear dovish voices, selectively ignoring hawkish warnings. Rate cuts are not an imminent "sugar-coated cannonball," but a distant "mountain in the fog." Before liquidity truly improves, all operations based on rate cut fantasies could become tools to harvest retail investors. The smartest move now is to adopt a defensive stance, reduce risk exposure, and prepare psychologically for increased volatility. Surviving to the next cycle is far more valuable than chasing extreme gains.