The Fed Finally Cuts Rates
What It Means for Crypto and Why 2026 Could Be a Reset Year
Institutional Altcoin Season Still Underway
After months of speculation, we finally got an interest rate cut from the Federal Reserve. This decision is expected to ignite a bull market across risk on assets, especially crypto. Lower borrowing costs create cheaper capital, which typically fuels risk-taking and investment. But while we’re optimistic about the near-term outlook, we also believe 2026 could mark the beginning of a bearish cycle, one that may reshape the economy and markets for years
Jerome Powell, under mounting pressure from both President Trump and the Fed’s own Board of Governors, announced the first 25 basis point rate cut of this cycle after every other central bank globally had already been cutting rates for some time. Notably, this was the first time since 1993 that the Board publicly disagreed with the Fed Chair, signaling the political and institutional tension around this decision. Powell framed the cut as a “risk management” move — not a response to immediate crisis, but a way to prevent one. To many people’s surprise, markets didn’t move much on the news. We believe this is because the cuts were already priced in, and Jerome Powell announced that they plan to cut rates two more times later this year, one in 2026, and another in 2027.
If you refer to the picture below, you can see that historically rate cuts follow signs of economic weakness (something already broken in the economy that needs repair) and that it’s usually followed by bearish market activity due to smart money realizing this and taking a risk off approach. But this time, the Fed acted preemptively and cut rates to avoid something breaking, and that changes the narrative. What this means is simple: the cost of capital is getting cheaper. When money is cheap, companies and investors borrow more, take more risks, and push more capital into financial markets, including crypto markets.
If you refer to the picture below you can see that Bitcoin dominance has fallen to levels not seen since the last major altcoin season in 2021, a clear signal that a blow-off top for altcoins may be approaching. This trend happens because investors take profits from Bitcoin, feel emboldened by their gains, and rotate into riskier altcoins in search of even higher returns — fueling explosive speculation across the market.
This is happening simultaneously while BTC and ETH inflows have been consistent (see picture below). Rising BTC and ETH ETF inflows are a strong signal of growing institutional interest and legitimacy in crypto markets. These products make it easier for traditional investors to gain exposure, driving fresh capital into the space. As inflows increase, they not only provide price support but also signal broader mainstream adoption, which fuels confidence across the entire crypto ecosystem.
Meanwhile, the Crypto Fear and Greed Index (see picture below) still sits in the middle — showing sentiment hasn’t overheated yet. This is the case even though we just got a rate cut and had the passing of the Genius Act and our president launching the World Liberty Financial Token. It’s because of this that we believe all signs point toward a blow-off top sometime between Q4 2025 - Q2 of 2026, where the rally could peak before conditions shift shortly after.
Our caution comes from looking at the long-term 20 year market cycles. History shows us that markets typically experience a 7–10 year run-up, followed by a 2–4 year period of decline or stagnation triggered by a black swan event accompanied by a period of high inflation, interest rates and an expected recession followed by a multi year bull market. For example (see picture below), markets climbed throughout the 1950s until the Cuban Missile Crisis in 1961, ran through the 1970s until the oil shocks, surged through the 1980s before the Gulf War, and rallied through the 1990s until the 9/11 attacks and the burst of the dot com bubble. More recently, the post-2011 bull market carried into the global pandemic of 2020, which spiked inflation and forced a rate response. Every cycle ends with a sharp reset and losses of lots of jobs, and based on this 20-year rhythm, we believe 2026–2029 is poised to be the next reset window.
This time, the job loss trigger may not be a war or housing collapse, but rather the adoption of artificial intelligence. Just as 2008 became the “layoff era,” we’re already seeing major tech companies cutting thousands of jobs as AI reshapes entire industries. When that reset hits, markets will contract, jobs will be lost, and capital will tighten because there is a supply and demand problem where there is high demand for a skill (people knowing how to use AI) and a small number of people who have that skill. That’s why we believe the window between now and the expected blow-off top in 2026 is critical.
However, there’s always a silver lining and one of them that we’ve identified is generating high yields via DeFi. In simple terms, DeFi offers a way to earn yields by providing liquidity on decentralized exchanges, essentially acting as a market maker. With buying volume expected to surge as capital floods in, yields will rise, creating a rare opportunity to generate high passive returns similar to selling shovels during a gold rush.
In every gold rush, most people who chased gold walked away empty-handed but they all had to buy shovels in order to be able to dig. The ones who sold shovels made consistent money no matter what. DeFi works the same way. While traders and speculators chase the next 100x altcoin, they all need liquidity to buy and sell those tokens. By being a liquidity provider, you’re essentially “selling the shovels”—earning passive fees every time a trade happens, regardless of whether the token moons or crashes. Instead of gambling on which coin might take off, you’re positioned to profit from the constant flow of trading volume that speculation creates.
But timing and strategy matter, which is where we come in. At Knowit Owlz, we’ve built the tools, resources, and coaching you need to navigate these turbulent markets. Our community is designed to help you maximize opportunities while managing risks — so you can build long-term wealth even in volatile conditions.
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