Why did BTC and ETH fall yesterday? This is a question that puzzles many people—hasn't the expectation of rate cuts increased?

Actually, it's still a liquidity issue. You can look at the global market situation and see some clues:

1. Rate cut expectations have indeed increased, but the positive effects brought by these expectations seem to have been mostly priced in. Apart from optimism for a December rate cut, the financial market is also responding to expectations of a rate hike for the yen.
2. The 1-year short-term bond yield has slightly increased. Obviously, tonight's data didn't show more optimism in the bond market. Normally, if rate cut expectations increase, the 1-year short-term bond yield should continue to decline, since short-term bonds are more sensitive to interest rates. The fact that yields are rising instead suggests that the market may have already priced in the expected December rate cut.
3. The 10-year and 30-year long-term bond yields have risen significantly. If the market was simply expecting future rate cuts, it should be buying US bonds, not selling them. This also means that the current long-term bond market is not trading based on rate cut expectations.
4. There are two main factors pushing up long-term bond yields. First, tonight’s PCE data shows that although inflation did not rise in September, it remains sticky. If there are concerns about future inflation, that will stimulate an increase in long-term bond yields. Second, the ongoing expectation of a rate hike for the yen is leading to US bond sell-offs and capital flowing back into yen assets. With US rate cuts and yen rate hikes, the interest rate differential is narrowing rapidly, and accelerated unwinding of carry trades will cause both JGB and US long-term bond yields to soar. Currently, Japanese bond yields are also rising rapidly.
5. Although the three major US stock indices are up and the VIX index has fallen to around 15, the Russell 2000 index is still declining. Clearly, short-term risk appetite in the US stock market is not very optimistic at present, even though the VIX index is in an optimistic range.
6. In summary, the main factors affecting the financial market at the moment are shifting gradually from rate cut expectations to yen rate hike expectations after the rate cut narrative has weakened, leading to a shift in capital liquidity. This also includes BTC. Next week during the Asian session, watch out for potential institutional sell-offs of BTC, similar to what happened this Monday. #十二月降息预测