👊👊On May 6, Goldman Sachs significantly raised its forecast for US Q2 GDP growth from -0.3% to 2.4%, significantly higher than the average level in recent years, mainly due to the resilience of consumption, stable employment and support from the recovery of the manufacturing industry, officially ruling out the risk of short-term recession. As a market indicator, its optimistic turn may prompt institutions such as JPMorgan Chase to adjust their expectations, strengthening the market's confidence in a "soft landing" of the economy. If the economy continues to rebound, the Fed’s interest rate cut cycle may be delayed.
On the same day, the Federal Reserve is about to announce its interest rate decision. The market expects that the probability of maintaining interest rates in May is 97.3%, and the probability of cutting interest rates in June is only 29.4%. Chairman Powell is expected to continue his hawkish stance, emphasizing that inflation risks have not been eliminated and reaffirming policy independence, which may exacerbate the conflict with the Trump administration. Recently, Trump has repeatedly pressured to cut interest rates and even threatened to replace Powell, but the Federal Reserve insists on data-based decision-making. Although non-agricultural employment increased by 177,000 in April and core PCE inflation fell to 2.6%, tariff policies may push up future inflation and increase policy complexity. If the release of interest rate cut signals is delayed, the US dollar may strengthen and the rise of US stocks may face adjustments. The trend of global monetary policy divergence may intensify with the announcement of the decisions of central banks in many countries.
Let’s talk about the impact on the cryptocurrency world👇👇
Goldman Sachs' upward revision of economic expectations and the Fed's hawkish stance may have the following impacts on the cryptocurrency market:
1. Liquidity suppression: The Fed’s postponement of interest rate cuts may lead to continued tightness in U.S. dollar liquidity, risk assets will be under pressure, and cryptocurrencies such as Bitcoin may face selling pressure in the short term, especially if adjustments in U.S. stocks may trigger a chain reaction.
2. The strengthening of the US dollar is bearish: If the US dollar index rises further due to hawkish policies, the prices of crypto assets, which are denominated in US dollars, may be suppressed. The previous negative correlation between the rise of the US dollar and the fall of the cryptocurrency market may reappear.
3. The anti-inflation narrative weakens: The decline in core PCE inflation weakens the hedging properties of Bitcoin digital gold, but if Trump’s tariff policy pushes up future inflation expectations, safe-haven demand may be reactivated in the medium and long term.
4. Policy game fluctuations: The intensified conflict between the Federal Reserve and the White House may trigger market concerns about policy uncertainty. The crypto market, as a high-volatility field, may experience violent shocks, especially at the current time when derivative leverage is high.
5. Differentiation of institutional strategies: If a soft landing of the economy is confirmed, traditional institutions may reduce the proportion of crypto asset allocation; but if funds overflow from the stock market, some high-risk preference funds may turn to altcoins to seek excess returns.
Currently, we need to focus on the changes in the correlation between $BTC and the U.S. stock market and the flow of ETF funds. If a decoupling signal appears, it may become a key to market turning point.
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