I was interested in Jerome Powell's recent speech, the head of the US Fed, because there were really juicy statements that could seriously impact the markets, especially crypto.
What I dug up from Powell's speech:
1 Crypto has received a free pass! Powell clearly stated: banks can safely work with the crypto industry and conduct operations with crypto. This is a mega-news! Previously, under the Democrats, the Fed, along with the OCC and FDIC, suffocated banks that even slightly touched crypto – complete debanking, buying Bitcoin officially was almost impossible. But now – bam! – they've opened the valve. It's like an ocean of liquidity that could flood the market when the masses regain interest in crypto (during the hype). This cycle will be the first where crypto is officially in the game. We are waiting for investors to want to throw money in.
2 Why hasn't the rate been cut yet? Powell says: “We would love to, but our and other countries' forecasts scream that inflation could spike this year.” The Fed is already satisfied with how they have tamed inflation, but they fear that Trump's tariffs could drive it up again. As long as the labor market holds and the economy doesn't crack, they decided not to rush and play it safe.
3 There's no recession, but there's a nuance. Powell states: “No signs of recession.” But if the labor market starts to slide (unemployment rises, employment falls) or inflation goes down – they will immediately cut rates. For now, the economy is strong, and the Fed is like: “We are waiting, no panic.” This Friday, the inflation report will be released, and the markets will react to it like it's the Champions League final. If the data shows weakness in the labor market or inflation – investors will immediately start betting on a quick rate cut, and that will bring positivity.
4 Trump's tariffs will hit in the summer. Powell confirmed that the effects of Trump's tariffs will show in reports for June, July, and August. If inflation doesn't shoot up – the rate will be cut. Back in April (when Bitcoin was at 74k), I said that the tariffs would make their presence felt in the summer, so we took long positions and waited for a rebound before the summer turbulence.
My analysis:
1 Crypto is now officially recognized! The Fed has given banks a carte blanche to work with crypto – this is just explosive. Previously, the crypto industry was like partisans in the forest: officially, no one supported it, banks were afraid to even breathe in Bitcoin's direction. Now, however, the road is open. This means that institutional investors can safely pour money into crypto, which means billions of dollars in liquidity. For now, the masses are not in the know, but when Bitcoin goes on hype again – hold on tight, it will be out of this world! This cycle will definitely not be worse than the previous ones, because crypto was previously isolated, and now there is a green corridor.
2 The Fed is relaxed but ready to act. Powell and Co. are satisfied that inflation is under control, but Trump's tariffs are like a slow-motion bomb. They could drive prices up, and the Fed doesn’t want to take risks. As long as the economy holds, they are not in a hurry to lower rates. But if the labor market starts glitching or inflation cools off – they will immediately switch to rescue mode. The inflation report on Friday will be key – if it shows weakness, the markets will react strongly because everyone will be expecting a rate cut.
3 Trump's tariffs are a summer trigger. Powell confirmed my vibe from April: tariffs will impact the economy in the summer. This could shake the markets because reports will show either rising inflation or economic weakness. But I believe the Fed won't let everything go to hell – they will cut rates and support the markets. Historically, when the Fed provides clarity, it triggers euphoria: low-cap stocks and altcoins could soar.
4 What does this mean for Ukraine? For us, it's a signal: global markets will be volatile, and this could hit our exports or investments. But if crypto goes up, our investors might catch a wave. Plus, if the Fed lowers rates, it could weaken the dollar, which is a chance for the hryvnia or exporters. But we need to be prepared for summer turbulence – Trump's tariffs are still in effect.
5 My advice:
• For traders: Stay quiet until Friday's inflation report. If the data is weak – seize the moment for longs, as the markets will soar on expectations of a rate cut. But don’t take risks before the report – volatility could hit.
• For Ukraine: We need to prepare for global swings. Exporters should look for new markets to avoid dependence on the States. Investors should pay attention to crypto, as with such a green light from the Fed it could heat up.
• For crypto enthusiasts: Wait for the masses to want Bitcoin again – this will be the first cycle where buying crypto can be done officially. Prepare your wallets!
Summary: The Fed has officially given crypto the green light to party, and this changes the game. The US economy is still holding up, but it could swing in the summer due to Trump's tariffs. Powell is ready to lower rates if a recession looms, and this will give the markets wings. For us in Ukraine, this is a chance to catch a wave, but we need to be prepared for turbulence. The report on Friday is like a series finale, so let’s keep our finger on the pulse. Crypto, low-cap stocks, and alts – prepare for takeoff if everything goes according to plan!