1. Key points analysis of the Federal Reserve's May interest rate decision
The interest rate decision announced by the Federal Reserve in May showed that the federal funds rate would be maintained in the range of 4.25% - 4.50%. It is noteworthy that the core Personal Consumption Expenditures (PCE) inflation data exceeded market expectations, reaching 2.8%. The release of this data triggered strong market attention and reassessment of the Federal Reserve's monetary policy direction.
As a result, market expectations for the Federal Reserve to cut rates in June surged sharply, with the probability of a rate cut soaring to 64%. At the same time, the market generally expects that the Federal Reserve's first rate cut may be delayed until July. The announcement of this interest rate decision and inflation data undoubtedly laid the groundwork for subsequent fluctuations in the financial market, especially having a profound impact on Bitcoin (BTC) in the cryptocurrency market.
2. Short-term risks and medium-term opportunities coexist in the BTC market
(1) Short-term correction risks are prominent
Recently, the Bitcoin market has been very active, with even voices predicting that the BTC price will break through $100,000. However, technical analysis shows that the current BTC market has shown overbought signals, indicating that there is correction pressure in the short term. Specifically, the correction risk for BTC significantly increases in the $93,000 - $95,000 range.
In the short term, the BTC price trend is highly dependent on the flow of institutional funds. If institutional funds continue to flow in, it will provide strong support for BTC prices; conversely, if there is a large-scale outflow of institutional funds, BTC prices may face a deep correction. Therefore, closely monitoring the dynamics of institutional funds becomes a key factor in judging BTC's short-term trend.
(2) Huge potential for medium-term upward movement
From a longer-term perspective, if the Federal Reserve lowers interest rates as expected in July, this will bring significant benefits to the Bitcoin market. A rate cut policy often leads to increased market liquidity, and investors seeking higher returns may direct funds towards Bitcoin and other assets with high growth potential. Based on historical cycle patterns and market analysis, under the impetus of the rate cut policy, BTC is expected to challenge the $120,000 price level.
As market confidence gradually recovers and funds continue to flow in, by the end of the year, the target price range for BTC could be raised to $150,000 - $200,000. Of course, the realization of this prediction requires the joint cooperation of multiple factors including the macroeconomic environment, monetary policy, and the development of the cryptocurrency market itself.
3. Analysis of institutional movements and risk warnings
Currently, the holdings of Bitcoin Exchange-Traded Funds (ETFs) are showing a significant increase, clearly indicating that institutional investors' attention to the BTC market continues to rise. Among them, MicroStrategy, as a well-known institution, has attracted market attention by increasing its Bitcoin holdings against the trend.
However, the phenomenon of 'buying expectations and selling facts' in the market is worth being cautious about. During the phase when the market expects the Federal Reserve to cut rates and BTC prices to rise, institutional investors may buy in advance; but when expected events such as rate cuts actually occur, institutional investors may choose to take profits, leading to market price fluctuations. Investors need to closely monitor institutional dynamics, carefully assess market risks, and develop reasonable investment strategies.
