U price unexpectedly breaks 7! Fed “rate cuts” + China’s heavy strike, has the crypto market logic completely changed?

The question I heard most during today’s livestream was “Why did U drop?”
I countered, “Did you come to crypto just to trade U? Aren’t you here to trade coins? Didn’t the ETH you bought yesterday go up 10%? Isn’t that great?”
Overnight, the U price (USDT to RMB exchange rate) broke 7 for the first time in ages! The community was in shock: “Haven’t seen it this low in years!” “Is the dollar about to get wiped out?”
This is more than just simple exchange rate fluctuations—the real story is two major shifts colliding:
1. The Fed is about to “surrender”? Trump’s people are coming
The news is basically confirmed: Trump is determined to replace Powell and put his confidant Hassett in charge of the Fed. The core goal: cut rates aggressively at any cost.
Market expectations have flipped: the probability of a December rate cut has surged to nearly 90%, and a 50 basis point cut next year wouldn’t be surprising. The dollar is expected to weaken sharply, putting huge passive appreciation pressure on the RMB—breaking 7 might just be the beginning.
2. China cracks down hard, stablecoin channels precisely targeted
China has recently taken strict action against money laundering and illegal currency exchange using stablecoins. This strike hit the “gray channels” of cross-border capital flows directly. Many people were forced to sell U for risk aversion, increasing short-term supply and accelerating the exchange rate drop.
Seemingly contradictory signals: Why did U price fall, but coin prices surge?
This actually reveals the complex logic of today’s market:
· Clear expectation of dollar devaluation: If the Fed shifts to aggressive rate cuts, global liquidity will flood the market again. Traditional capital will look for new outlets, and crypto becomes a potential reservoir.
· The bizarre “crackdown is bullish” mentality: some market participants believe
· Market sentiment cycle reversal: As expectations improve, early bullish pressure is released and overall liquidity improves. The U price, as the price of the fiat channel, is seen as a sign of the early bull market stage—every bull market in history saw U price go through a similar period of pressure.
Old hands vs. new entrants: huge “cognitive gap”
Facing volatility, there are two very different voices in the market:
· Newcomers panic: “Is U about to get wrecked?”
· Veterans stay calm: “It’s always like this on the eve of a bull market. U falling is actually a good thing.” Some are even planning: buy U now at a low, wait for the rate to rebound to 7.5, then switch back and easily earn a 10% difference.
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