The Federal Reserve's interest rate meeting on the 7th is about to unfold, and there are essentially two scenarios for Bitcoin's (BTC) movement:
Scenario One: No rate cut in May, which the market has already anticipated, will lead to at most a slight correction in Bitcoin. This bearish sentiment has long been digested, and the correction is precisely an excellent opportunity to go long.
Scenario Two: A direct interest rate cut in May will surely send Bitcoin soaring, breaking through the $100,000 mark in no time and initiating a new round of explosive growth. I firmly believe that there will definitely be a rate cut in June, and until then, buying the dips is the way to go. It is expected that Bitcoin will refresh its historical high before the rate cut in June, and then it will correct to the $80,000 range.
In the current market, institutions are buying aggressively. Once Bitcoin stands above $100,000, $3 billion in short positions will be instantly liquidated, which is the 'fat meat' that speculators have long coveted. This trend has been particularly evident recently, as the daily highs quickly become lows within a few days, with prices continuously pushed higher by funds, causing shorts to get deeper into trouble. How could the speculators easily crash the market to let them off the hook?
Although the market bets that the probability of the Federal Reserve maintaining interest rates in May is as high as 92.3%, the impact of this decision on financial and cryptocurrency markets is far more complex than it appears:
I. Triple Shock in the Financial Market
1. Short-term Volatility Narrowing: As long as the interest rate decision meets expectations, investors will tend to be cautious. Mainstream cryptocurrencies like Bitcoin are likely to test support levels first. Once the Federal Reserve releases a 'dovish' signal, prices will rebound immediately, and market sentiment will switch rapidly along with policy signals.
2. Intensified Mid-term Games: Even if there is no rate cut in May, the market has already bet on the timing of the rate cut. If the Federal Reserve states to 'watch inflation,' speculative funds will flood in, and altcoins will likely see a wave of speculative excitement.
3. Capital Flow Reversal: High interest rates make dollar assets more attractive, and some funds in the cryptocurrency market may flow back to traditional finance. Stablecoins like USDT will also be affected, and price fluctuations in the short term are unavoidable.
II. Opportunities and Risks in the Cryptocurrency Market
A low interest rate environment has always been beneficial for cryptocurrency assets. Even if this time the interest rate remains unchanged, as long as the market has confidence in easing policies, funds will continue to flow in. From a price trend perspective: the short-term price will first stabilize to digest the news; the mid-term will revolve around policy expectation games; the long-term trend will depend on capital flows and market sentiment.
Overall, while the Federal Reserve's inaction may relieve short-term liquidity pressure, it still needs to closely monitor inflation data and policy shifts in the long term. The market will likely maintain a trend of oscillating upward, and capturing the rhythm is key to seizing the dividends!
