#BTC #Fed statement
On May 7, 2025, the Fed announced to maintain interest rates in the range of 4.25%-4.50% (with a probability of 97.2%), but Powell's post-meeting statement became a market focus. Although he did not specify a rate cut path, he hinted that if inflation is controllable, a rate cut may start in June, emphasizing the need to monitor the U.S. economy's 'stagflation' risk (GDP contracted by 0.3%, consumer confidence fell to a 13-year low).
Impact on the dollar and U.S. Treasuries:
Dollar: If Powell sends dovish signals (like rate cut expectations), the dollar may come under short-term pressure, pushing funds towards risk assets; conversely, if he emphasizes anti-inflation priorities, the dollar may strengthen, suppressing the crypto market.
U.S. Treasuries: Increased interest rate cut expectations may lead to a decline in U.S. Treasury yields, and funds may shift towards high-risk assets like Bitcoin in search of higher returns.
Direct impact on Bitcoin:
Short-term volatility: The market has partially digested expectations for unchanged interest rates; technical indicators show strong support for BTC at $95,000. If it breaks through the resistance level of $97,000, it may challenge the $100,000 mark. As of publication, it has already risen to $99,000.
Liquidity expectations: If the Fed signals easing (like a June rate cut), along with potential liquidity injections from the Treasury, Bitcoin may experience a short squeeze; if unexpectedly hawkish, caution is needed for a pullback below $93,000.
2. Trump's policy and developments in the crypto industry roundtable
Trump's crypto strategy:
Bitcoin reserve plan: Trump has repeatedly proposed establishing a national Bitcoin strategic reserve (BSR), advocating for the Treasury to purchase Bitcoin through executive orders or congressional legislation (e.g., using the Exchange Stabilization Fund), aimed at consolidating the U.S.'s leadership in the crypto space.
Mining support: Trump has promised to support the Bitcoin mining industry, believing it contributes to energy dominance and may attract mining companies back to the U.S. through policy.
Policy game and market reaction:
Discrepancy between the Fed and the Treasury: Powell clearly opposes the Fed directly holding Bitcoin, stating that Congressional legislation is required, but Trump may bypass the Fed to implement BSR through the Treasury, resulting in policy uncertainty.
Market sentiment: Trump's positive statements have previously helped Bitcoin break through the historical high of $108,000, but Powell's 'cold water' remarks triggered short-term sell-offs, causing BTC to briefly drop below $100,000.
Potential topics for the roundtable discussion:
Regulatory framework: Potential discussions on state-level Bitcoin reserve bills (e.g., Arizona plans to invest 10% of state reserves in BTC) and compliance of stablecoins.
Institutional participation: More sovereign funds (like those from the Middle East and Asia) may follow U.S. state governments into the market, driving BTC demand.
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3. Multi-market linkage and Bitcoin trend prediction
Correlation between U.S. stocks and the crypto market:
- If Fed easing boosts U.S. stocks (e.g., tech stocks rebound), funds may flow into Bitcoin, creating a coordinated rise; conversely, if U.S. stocks fall due to weak economic data, the crypto market may come under pressure.
Foreign exchange and liquidity factors:
Dollar index: Expectations of rate cuts may lead to a weaker dollar, benefiting Bitcoin priced in dollars; if the dollar strengthens due to safe-haven demand, it may suppress BTC's short-term performance.
Global liquidity: If the Fed slows down its balance sheet reduction pace, coupled with simultaneous easing from other central banks (like the ECB), it may release more liquidity into the crypto market.
Technical analysis and on-chain signals:
-Key price levels: BTC needs to remain above $100,000 to confirm a breakout; otherwise, it may retest the support area of $95,000 to $98,000.
On-chain data: Continued decline in exchange balances and accumulation by whale addresses indicate that the long-term bullish logic remains unchanged.
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Comprehensive predictions and strategic recommendations
1. Short-term (1-3 months):
Bullish scenario: If the Fed cuts rates in June, along with Trump's policy advances, BTC is expected to break through $105,000 and challenge $120,000.
Bearish risks: If inflation rebounds leading the Fed to adopt a hawkish stance or if BSR legislation faces obstacles, BTC may pull back to the range of $85,000 to $90,000.
2. Mid-term (6-12 months):
-Policy implementation: If the U.S. passes state/federal Bitcoin reserve bills, with increased institutional holdings, BTC may enter a 'super cycle', targeting $150,000 to $200,000.
Macro risks: Tightening dollar liquidity and escalating geopolitical conflicts may become major bearish factors.
3. Investment strategy:
Dipping to build positions: Focus on the support level of $93,000 to $95,000, allocate spot or ETFs (e.g., BlackRock's IBIT saw nearly $1 billion in daily inflows).
Hedging volatility: Use the options market (e.g., $100,000 call contracts) to lock in profits, or short altcoins to hedge the system.
The above is for reference only
