The new rate cut cycle is beginning to take shape, and the encryption industry welcomes favourable information, with the Ethereum Spot ETF looming.

1. The Federal Reserve remains cautious, and the global rate cut cycle gradually emerges.

Recently, the Federal Reserve kept the target range for the federal funds rate unchanged at 5.25% to 5.50%, and plans to slow down quantitative tightening starting in June. The focus of the meeting still revolved around "high inflation and the need for caution regarding interest rate cuts," which aligns with market expectations. Currently, the market estimates the probability of a rate cut in September to be close to 50%, with a rate cut by the end of the year being almost certain.

At the end of the month, Federal Reserve Board member Christopher Waller clarified the conditions for future interest rate cuts, providing the market with clearer guidance. He stated that, under the premise of a stable job market, it would take another three to five months of good inflation data before considering rate cuts by the end of the year.

The US CPI data for April met expectations, rising by 3.4%. Although the job market is currently not as strong as expected, the number of initial jobless claims remains at historically low levels, indicating resilience in employment. The preliminary values for May's manufacturing and services PMIs both exceeded expectations, demonstrating economic vitality. Therefore, the Federal Reserve indeed needs to observe further.

However, there are already signs that a rate cut cycle is about to begin. Regulatory bodies such as the Federal Reserve are formulating new plans to relax previous requirements for large banks to increase their capital, which is seen as one of the important signals for a rate cut.

From a global perspective, the interest rate cut cycle has already begun. A report from Nomura Securities indicates that more than a dozen major central banks have cut interest rates, and it is expected that the European Central Bank, the Swiss National Bank, and others will follow suit. Against the backdrop of global interest rate cuts, a cut in the US interest rates will also be an inevitable trend.

2. NVIDIA Hits New High, Interest Rate Cuts May Change the US Stock Market Landscape

NVIDIA's recently announced Q1 2025 fiscal year performance far exceeded expectations: revenue increased by 262% year-on-year to $26 billion, net profit increased by 620% year-on-year to $14.88 billion, and earnings per share were $6.12. Data center revenue increased by 427% year-on-year to $22.6 billion, and revenue is expected to rise to $28 billion next quarter.

After the news was announced, Nvidia's stock price surged, with a market value exceeding $2.6 trillion, making it the third largest company by market cap in the US stock market, surpassing the entire market value of the German stock market. Interestingly, on the same day, the stock prices of other tech giants all saw a decline.

In fact, the recent gains in the U.S. stock market are primarily due to the AI sector, especially the "Seven Tech Giants." Excluding these companies, the overall performance of the U.S. stock market has been mediocre, with the gains in other global markets being close to zero.

However, with the upcoming interest rate cut cycle, market liquidity and risk appetite may improve, which could alleviate the potential bubble risk in the AI sector. During the interest rate hike cycle, the market tends to avoid risks, leading to extreme clustering in the AI sector. The onset of the interest rate cut cycle may change this pattern, bringing opportunities to the long-depressed non-AI sectors, and the investment style in the US stock market may undergo a transformation.

3. The encryption industry welcomes favourable information, with the Ether spot ETF on the horizon.

After a dull April, the encryption market welcomed a new wave of growth in May: Bitcoin once broke through 71,000 USD, and Ether surged over 20% on May 21, subsequently approaching 4,000 USD.

This round of rebound is mainly due to the favourable information regarding the Ethereum ETF that came from the United States. Although the market officially reacted around May 24, there was a strong rise as early as the 21st, followed by a period of fluctuations, indicating the market's long-term optimism towards this favourable information.

On May 24, the SEC officially approved the 19b-4 filing regarding the Ethereum ETF, which means the SEC has approved the various details for the listing of the Ethereum ETF. Although the S-1 filing has not yet been approved, the future listing of the Ethereum Spot ETF has been set in stone.

At the same time, the FIT21 bill was passed by the House of Representatives, providing a clear definition for the regulatory framework for digital assets and paving the way for more encryption asset applications for spot ETFs and compliance in the future.

The SEC's shift in attitude towards the encryption industry may be related to the use of crypto assets as a political bargaining chip by both parties in the U.S. Recently, some Democratic lawmakers have joined forces with Republican lawmakers to push for the repeal of SAB 121, which could mark a significant change in the Democratic Party's cryptocurrency policy. On the Republican side, Trump has been openly supporting the development of cryptocurrency, attempting to win over the votes of crypto asset holders.

Overall, May has been a month of favourable information for the encryption industry, as crypto assets are being accepted by the traditional financial world at a pace beyond expectations, adding new momentum to the bull market.

Four, Summary

Global monetary policy is moving towards a loosening direction. Although the Federal Reserve is cautious about interest rate cuts, various signs indicate that a rate-cutting cycle is imminent. The technology sector, especially in AI-related fields, continues to maintain strong growth momentum. The encryption currency industry is gradually moving towards compliance, bringing new opportunities for investors. These trends are worth close attention, and investment opportunities should be sought in related assets.