Emergency Alert! Tonight, the Federal Reserve will detonate a market nuclear bomb, is the cryptocurrency market in danger?
Everyone pay attention! Tonight, the financial market will face a heavyweight event capable of shaking the entire landscape - at 2 AM, the Federal Reserve will announce its interest rate decision. The impact of this meeting will radiate globally, especially in the cryptocurrency market, which is facing a daunting challenge and may encounter a significant shake-up!
One, the Federal Reserve meeting: three key points determine the outcome.
There are three key points in this Federal Reserve meeting that directly relate to the direction of the financial market in the next six months:
1. The interest rate decision is without suspense: Currently, the market generally believes that the Federal Reserve will 100% maintain the existing interest rates, and this result has been fully digested by the market, expecting no direct impact on the cryptocurrency market.
2. Significant change in interest rate cut direction for June: The most critical point is whether there will be an interest rate cut in June, which has become the focus of the market. The latest CME data shows that the probability of a June interest rate cut has plummeted from 68% to 31.8%, with a high probability of 67% for not cutting rates. This means Powell has a two-thirds chance of making hawkish statements tonight, with only a 30% chance of releasing a dovish signal. If there is no interest rate cut in June, the liquidity and market sentiment in the crypto space will be severely tested.
3. Economic forecast report hides mysteries: The economic forecast report during the meeting should not be overlooked, with a focus on unemployment and inflation data. These data will directly determine when the Federal Reserve will intervene to stabilize the market, having a profound impact on the macro environment of the cryptocurrency market. If the unemployment rate rises and inflation data is not ideal, it may increase the pressure on the Federal Reserve to cut rates in the future; conversely, it may strengthen the Fed's resolve to maintain existing policies.
In summary, short-term bearishness has basically become a certainty. Worse still, if there is no interest rate cut in June, the next window for a rate cut will be at the end of July. This two-month gap could cause the market to become turbulent and even trigger a sharp decline, so investors must prepare for the worst. Personally, I have already begun to liquidate long positions to hedge against risks, preferring to miss a potential 5% rebound than to lose my principal. After all, even if Powell suddenly turns dovish, there will be plenty of time to re-enter the market once it is confirmed that there will be a rate cut in June; there is no need to take risks at this moment.
Two, three warning signals sound the alarm.
In addition to the uncertainties brought by the Federal Reserve meeting, there are three recent warning signals indicating that the risks in the cryptocurrency market are intensifying:
- North American mining companies selling Bitcoin: The largest North American mining company, Bitfarms, announced that it would stop purchasing mining machines and continue to sell Bitcoin. This move indicates that even mining giants are worried about the market outlook and are starting to retract, which undoubtedly brings a heavy blow to market confidence.
- Continuous decline in network computing power: A continuous decline in network computing power means that more miners are cashing out and leaving the market. Computing power is the cornerstone of the Bitcoin network; its decline not only reflects miners' pessimistic expectations about mining profits but may also affect Bitcoin's security and stability.
- Mysterious whales continue to sell: The mysterious whale 'Spoofy' has been selling continuously for two weeks after buying in the 70,000 - 80,000 USD range, and is expected to clear out remaining positions within ten days. The actions of whales have a huge impact on the market, and their continued selling behavior may trigger panic selling in the market.
Three, macro-level risks are intensifying.
From a macro perspective, there are some worrying signs in the U.S. economy. The number of initial jobless claims in the U.S. has surged, which is a clear sign of a deteriorating labor market. Even the usually optimistic Trump admitted for the first time in an interview that the economy might be in recession. When the most vocal proponents of the economy express concerns about the outlook, we must not be blindly optimistic about the market. In this macro context, the cryptocurrency market, as a risk asset, is difficult to remain unaffected.
Four, the false prosperity brought by Bitcoin ETFs.
Of course, not all news in the market is bad. Recently, Wall Street funds have been pouring into Bitcoin ETFs, with net inflows for nine consecutive days, setting a record in 20 years. This seems like a positive signal, but historical experience tells us that such frenzied rises are often accompanied by sharp corrections. Just like last weekend, when Bitcoin rose to 97,000, I advised everyone to take profits on long positions, which proved to be a successful exit operation. For example, last week, I predicted the collapse of the Trump concept and led everyone to short, achieving precise targeting. Therefore, we must remain vigilant about the frenzied capital inflow into Bitcoin ETFs; this may just be a false prosperity before the storm.
Five, vigilance is needed regarding the Ethereum upgrade traps.
Additionally, it must be reminded to pay attention to the traps of Ethereum upgrades. The so-called major upgrade on May 7 has not attracted much attention. It is recommended to take advantage of the current price rebound and reduce positions in batches. Because immediately after the upgrade, the Federal Reserve's interest rate decision will be a 'bomb,' and large funds are waiting for this uncertainty to settle. In this case, blindly holding Ethereum may pose huge risks.
Six, beware of chasing after the surges of altcoins.
There is also the altcoin OZK, which suddenly surged 30% today. The project team has announced that they will be doing something significant in May, such as burning tokens, launching the mainnet, and opening staking, etc. However, my advice is clear: this kind of news-driven altcoin surge is an opportunity to sell, so do not foolishly act as a bag holder. A surge without actual value support is often accompanied by significant decline risks.
Seven, clarify strategies and respond cautiously.
Finally, I provide everyone with a clear response strategy: closely monitor two things: when the whales stop selling and the Federal Reserve's final stance on the June interest rate cut. Before the situation becomes clear, do not easily gamble on the direction, or you may easily become cannon fodder. If Powell hints tonight at a June interest rate cut (even though the probability is only 31%), I will consider buying back some positions; if he continues to maintain a tough stance without cutting rates, then I will directly short.
In this uncertain market, survival is the most important thing. It is always better to wait for the market to show a clear direction before taking action than to blindly charge ahead as cannon fodder. What we need to do now is to preserve our strength, keep our ammunition full, and wait for the Federal Reserve to finish throwing bombs. Once the situation stabilizes, we can follow the winning side to clean up the battlefield.
