The selling pressure from long-term profit-taking and miners in the crypto market, combined with Chairman Powell's speech next week, will be the biggest variable for Bitcoin?

Next Friday (August 22), Federal Reserve Chairman Powell will speak at the Jackson Hole meeting, and the global market is highly focused on it. The current economy presents a "tale of two cities": July's PPI wholesale prices surged by 0.9%, pushing up prices, while the job market is cooling, increasing the risk of stagflation.

Morgan Stanley warns that Powell could become an “expectations killer,” or downplay market bets on a 50 basis point rate cut in September, leaving room for only a 25 basis point cut, or even adopt a vague stance on rate cuts. Following the release of the PPI data, the probability of a rate cut in September has dropped from 100% to 85%, highlighting market vulnerability.

Trump is simultaneously pressuring for rate cuts while scouting for potential replacements for the Federal Reserve Chairman, intensifying political pressure on the Fed and complicating the situation.

On the eve of Powell's speech, Bitcoin becomes a potential variable in the market. Under the cloud of stagflation, cryptocurrency investors are starting to position themselves: if a rate cut materializes, hot money may flow into Bitcoin, increasing its appeal as an “anti-inflation narrative”; in a stagflation environment, Bitcoin is viewed as an “alternative hedging tool” outside of stocks and bonds due to its fixed supply; the policy uncertainty brought by Trump also makes decentralized Bitcoin more favored by risk-averse funds.

However, risks remain: if Powell sends out strong hawkish signals (such as hinting at no rate cut), risk assets like Bitcoin may experience a significant drop along with the market.

Moving forward, the market needs to focus on three key signals:

1. The PCE inflation data to be released on August 30, which is a more important inflation indicator for the Federal Reserve, may directly impact policy direction;

2. Trump's dynamics; if he escalates tariff threats, it could further ignite stagflation risks;

3. On-chain data from the cryptocurrency market; if institutional wallets show signs of accumulation, it may suggest short-term opportunities for Bitcoin.

Amidst the market divergence triggered by Powell's speech, investors who can accurately capture signals are likely to gain the upper hand, and the financial markets may face significant volatility next week.