Recently, the unexpected rise in PPI triggered a panic sell-off in the market; however, if Powell's remarks on Friday are not overly pessimistic, sentiment is expected to recover, leading to a short-term rebound. This time, the cryptocurrency market's 'macro disease' may need 'macro medicine' to heal.

Currently, CME traders are betting on interest rate cuts, but the final decision rests with Powell. The dilemma he faces may determine the market direction in the coming weeks:

Supporting interest rate cuts: The job market is weakening, and the bond market is pricing in significant rate cuts. If no signals are released, future communication costs will increase.

Opposing interest rate cuts: July's PPI saw the largest increase in three years, with significant political pressure, and inflationary pressures still exist. If overly hawkish, it may be seen as the Federal Reserve losing its independence.

So, how will Powell respond to this financial game? His remarks may influence the trends in the cryptocurrency market, and here are three possible scenarios:

1. Release interest rate cut signals (dovish): If Powell conveys dovish signals, the market may see a rebound, especially in US stocks and Bitcoin, with a strong upward movement possible in the short term.

2. Maintain strategic ambiguity (neutral to dovish): Powell's maintenance of a vague policy stance may lead to short-term disappointment in the market, but the market will still expect a rate cut in September, and fluctuations in the short term are unlikely to be large; there are still rebound opportunities in the cryptocurrency market.

3. Emphasizing inflation risks (hawkish): If Powell strongly emphasizes inflation pressures, the market may quickly adjust, the bond market may retreat, and US stocks and Bitcoin may experience a rapid decline.

From the current market environment, I lean towards the second path: Powell may maintain a neutral stance, acknowledging inflation risks while keeping policy ambiguous, with future decisions relying more on data. This means there may not be drastic fluctuations in the short term, but in the long run, the market will closely watch the September meeting.

Opportunities in the cryptocurrency market: For us, this background presents the best opportunity to seize short-term fluctuations and pullbacks. Whether it's Bitcoin or Ethereum, there may be a wave of adjustments and rebounds following Powell's speech. If the market expects interest rate cuts, it could bring a wave of upward opportunities for the cryptocurrency market. If Powell continues to provide ambiguous statements, it also means that market expectations for rate cuts have not changed, and opportunities in the cryptocurrency market still exist.

Conclusion: Regardless of the direction of Powell's speech, market sentiment fluctuations often bring short-term opportunities to the cryptocurrency market. In such an uncertain macro environment, keeping up with changes in market sentiment and seizing the best timing for pullbacks will be key to our profit!

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