On May 15 local time, Federal Reserve Chairman Powell delivered an important speech at the 2nd Thomas Laubach Research Conference. Although this conference had a more academic discussion focus, its content released crucial signals with far-reaching implications for future global financial markets: the Federal Reserve is currently reassessing its policy-making framework and plans to complete the revisions in the coming months.
This information is not only a 'guarantee' or 'shock wave' for traditional markets, but for the crypto asset market, especially macro-sensitive assets like Bitcoin and Ethereum, it may also be the starting point for the next trend signal.
'The era of high interest rates' may become the new normal, and the Federal Reserve is rethinking the inflation mechanism.
Powell made a key judgment in his speech: We may be entering an era of more frequent and persistent supply shocks, which will pose structural challenges to macroeconomic policy and central bank goal setting.
This is a public reflection on the underlying logic of U.S. monetary policy in the context of 'high inflation + geopolitical conflict + green transformation + trade barriers' in the post-pandemic era. Unlike previous market consensus that 'the Federal Reserve will cut rates within the year', Powell's speech this time further reinforced the view that 'high interest rates will persist longer'.
This forms an important contradiction with the crypto market's expectations of interest rates—contradictions often serve as starting points for market fluctuations.
Recently, Mlion.ai pointed out in its macro expectation model that once the Federal Reserve officially acknowledges 'long-term high interest rate expectations', it will directly impact the capital flow in the crypto market, especially the liquidity allocation related to high-risk assets (such as Memecoins and early altcoins).
The framework is about to be revised, and the 'priority' of inflation and employment is being adjusted.
Reviewing the Federal Reserve's consensus statement: Since its first release in 2012, this document has become the core guide for the market's assessment of monetary policy direction. In the 2020 evaluation, the Federal Reserve first included 'maximum employment' as one of the core measures of monetary policy and tolerated an inflation level of 'slightly above 2%' in the context of long-term low inflation.
However, now, Powell points out that the expression of 'underemployment' may need to be re-examined. This indicates that the Federal Reserve may be ready to weaken its tolerance for overheating in employment, thereby taking early action to curb inflation expectations.
Mlion.ai's policy sentiment interpretation model has downgraded the 'rate cut probability' rating from 'neutral to strong' to 'neutral to weak' this week, and recommends paying attention to the timing signals released by the time lag between inflation PCE data and policy statements.
Market expectations and reality are gradually decoupling, and short-term fluctuations may intensify.
The market originally viewed the core PCE data to be released on May 31 as a barometer for the Federal Reserve's next moves. Previously, the CPI had fallen to 2.3%, and Powell predicted the PCE would be around 2.2%. However, this seemingly 'dovish' data did not lead Powell to issue a clear easing signal, but rather reinforced a fact:
Even if data declines, the Federal Reserve's framework logic is undergoing structural changes, and short-term rate cuts will lean more towards 'patience' rather than 'active easing'.
This 'seemingly favorable but not taking action' strategy will exacerbate short-term uncertainty and volatility in the market. The crypto market, as a field highly sensitive to macro sentiment, is particularly susceptible to the influences of interest rate pricing, policy signals, and expectation games.
Mlion.ai suggests using its emotional trading map feature, combined with backtesting CPI, PCE, employment data, and keywords from Powell's speeches, to model short- to medium-term support and resistance for high market capitalization tokens like ETH, BTC, and SOL.
Implications for the crypto market: The era of structural asset re-evaluation has already begun.
This speech actually released a long-term signal worth pondering— the Federal Reserve will formally adjust its 'policy framework', possibly involving:
'Is the inflation target still anchored at 2%?'
'Does maximum employment still have priority?'
'How to cope with structural supply shocks and uncertainties?'
These changes may seem distant from the crypto market, but their impact is profound:
Changes in interest rate anchoring structure: Valuation models for 'inflation-resistant narrative' assets like BTC and ETH will undergo a new round of reconstruction.
Changes in risk appetite premium: Funding support fluctuations for Memecoins and early Layer 2 projects will significantly increase.
Increased pressure for capital repatriation in emerging markets: A strong dollar will accelerate the risk aversion rotation of crypto capital in Asia and Europe, making the capital pool more concentrated.
Conclusion: Do not overlook the voice of the 'rule makers'.
Powell did not say 'immediate rate cuts', nor did he say 'there will be no rate cuts', but what he emphasized more was: 'We are rewriting the rules of the game.'
And once the rules of the game change, the strategies, chips, and opportunities for players will also change. For anyone who takes investment seriously, the key question now is not 'how much will it rise tomorrow,' but:
What kind of new cyclical starting point are we standing at?
At this critical turning point, Mlion.ai, as an AI-driven crypto research assistant, continuously tracks policy changes, macro events, and on-chain funding behavior, helping investors filter out the elements that truly impact trends from complex signals. Whether judging trend reversals or adjusting asset allocation, Mlion.ai's data support and AI research report system can help you make more informed decisions.
Disclaimer: This article does not constitute any investment advice and is for informational exchange only. The market is risky, and investment should be cautious.
