Tomorrow at 2 AM, the Federal Reserve's interest rate decision will absolutely be the focus of the global market.
Though holding steady (with rates maintained at 4.25%-4.5%) is a certainty, the real powder keg is Powell's speech—every word from this guy could trigger BTC and US stocks.
Trump is still madly stirring the pot on the side, directly calling for a '200 basis points rate cut', this operation is simply roasting the Federal Reserve over a fire.
Core Conflict: Where will Powell's 'knife' strike?
Hawkish Script (Cutting Liquidity): If Powell stubbornly clings to inflation (for example, emphasizing 'tariffs pushing up prices' 'core PCE may rebound to 3.4%'), or even hints at not ruling out interest rate hikes, the market will immediately collapse for you to see.
Nasdaq futures are already trembling, and with such high leverage in the crypto market, a wave of liquidations can teach a lesson in no time.
Data Support: The March dot plot shows 9 officials supporting two rate cuts this year, but if two switch sides tonight, the median expectation will change to 'only one rate cut'. JP Morgan predicts core PCE will rebound to 3.4% by the end of the year, which is the hawkish ammunition.
Market Reaction: Referencing Powell's hawkish remarks in April, the Nasdaq plummeted 3% in a single day, while BTC resisted the downturn (quickly rebounding after a flash crash to $84,000).
If the plot repeats this time, altcoins might not be so lucky.
Dovish Script (Providing Sugar): If Powell loosens up and says 'the economy has downside risks' 'inflation is temporary', or the dot plot maintains two rate cut expectations, the September rate cut expectation will strengthen, and the liquidity frenzy will directly push up BTC and US stocks.
Data Support: Currently, rate futures bet on a 58% probability of a rate cut in September, but if Powell mentions 'weak labor market' (for example, unemployment rate expectation raised to 4.5%), dovish expectations will strengthen.
Risk Point: Powell is unlikely to be straightforward, but instead will play Tai Chi: 'Policy is in a good position, continue to observe.'
This ambiguous attitude might instead trigger market anxiety.
Trump's '200 basis points rate cut' farce: Political pressure vs economic reality.
Trump's remarks this time are purely political maneuvers, but there are two points that cannot be ignored behind it:
Historical Lessons: In 2021, the Federal Reserve misjudged inflation as 'transitory', leading to a series of aggressive rate hikes. Now Powell would rather be criticized than repeat the same mistake.
Tariff Bomb: Trump's 10% import tariff expires in July, if it escalates to a full-blown trade war, inflation and GDP will be hit in both directions (Goldman Sachs predicts GDP growth may drop to 0.1%). Powell cannot afford to pay for this uncertainty.
How to play in the crypto market? Keep an eye on these three signals.
Dot Plot Median: If the rate cut expectation changes from two cuts to one, it will be bearish in the short term; if it remains unchanged, BTC may challenge previous highs.
Powell's Keywords:
Hawkish Signals: 'Persistence of inflation' 'Strong labor market' 'Not ruling out further tightening'.
Dovish Signals: 'Economic uncertainty' 'Waiting for data' 'Satisfactory progress on inflation'.
Dollar Index Reaction: Hawkish remarks will push up the dollar, but if the dollar rebounds weakly (Bank of America states 'structural weakness'), BTC may strengthen against the trend.
No matter how Powell chooses tonight, volatility will explode. Additionally, the regulatory framework for stablecoins has been repeatedly mentioned by Powell, and the compliance process for USDT and USDC may accelerate, so those holding these assets need to keep a close eye on policy direction.
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