Core Insights - The Federal Reserve's recent payment innovation conference led to a decline in Bitcoin and Ethereum prices, indicating a "good news is bad news" phenomenon as the discussions were not directly relevant to mainstream cryptocurrencies [1][3] Regulatory Developments - Regulatory upgrades were a primary focus, with the potential introduction of a "federal crypto license" to replace the fragmented state-level money transmission license system, which may accelerate the elimination of smaller trading platforms due to rising compliance costs [3] - The SEC may issue "non-security statements" for the top 50 tokens, facilitating the entry of major asset management firms like BlackRock and Fidelity, with Bitcoin ETF sizes expected to exceed $500 billion, gradually gaining market pricing power [3] Market Dynamics - The cryptocurrency market experienced a significant crash on October 11, 2025, but institutional inflows into Bitcoin and Ethereum ETFs from October 12 to 15 amounted to $2.71 billion and $488 million, respectively, indicating that institutional investors are capitalizing on lower prices [4] - Institutional holdings of Bitcoin increased from 15% in 2022 to 32% in October 2025, with major institutions like Grayscale and BlackRock holding 18% of the total [6] Macroeconomic Factors - The market anticipates a 99% probability of a 25 basis point rate cut in October, with the Fed potentially ending its balance sheet reduction and lowering reserve rates, which could release trillions in liquidity [8] - Historical data shows that during the last rate cut cycle in 2020, Bitcoin surged from $7,000 to $28,000, a 300% increase [8] Liquidity and Timing - There is a time lag in the liquidity release from rate cuts and balance sheet adjustments, which may lead to speculative trading ahead of actual implementation, potentially causing short-term corrections post-announcement [9] Technological Innovations - Ethereum's Shanghai upgrade has stabilized staking yields at 4.2%, attracting over 28 million ETH, or 22% of the circulating supply, while Bitcoin's Lightning Network transaction volume surpassed $1 billion in September 2025, a 35% month-over-month increase [11] - The Trump administration's "Bitcoin Strategic Reserve" policy positions Bitcoin alongside gold as a reserve asset, indicating growing institutional support [11] Regulatory Framework - The passage of the GENIUS Act in 2025 established a federal regulatory framework for stablecoins, mandating issuers to enhance reserve transparency and maintain a 1:1 peg to the dollar or short-term U.S. Treasury securities [13] AI and Payment Innovations - AI technologies are enhancing payment security and risk management efficiency, with advancements like the LightGPT financial model monitoring on-chain transaction anomalies and improving compliance for stablecoins [15] - The Hong Kong Monetary Authority's mBridge project supports the issuance of stablecoins and has significantly reduced cross-border payment times from three days to five seconds [15]