Federal Reserve Policy Changes + Trump to Speak at Cryptocurrency Summit

1. Traditional Market Impact

• Quantitative tightening slows down but interest rate cut expectations decrease, meaning that the Federal Reserve still wishes to maintain a tight policy but is beginning to focus on market liquidity risks.

• The stock market may respond positively in the short term (due to the slowdown in quantitative tightening), but if the market originally expected more interest rate cuts, it may trigger some profit-taking.

• Long-term impacts still depend on inflation and employment data; if CPI cools and the economy slows down, the Federal Reserve may still cut rates in 2025, but the extent may be less than the market initially expected.

2. Cryptocurrency Market Impact

• Trump's remarks + strategic Bitcoin reserve plan will boost market confidence in Bitcoin in the long term and may even affect policy regulatory direction.

• If the U.S. government really starts hoarding Bitcoin, it would be a historic event and could encourage other countries to follow suit, establishing Bitcoin as a national-level reserve asset trend.

• In the short term, Bitcoin and the cryptocurrency market may experience strong stimulation, with prices potentially rising, especially the market reaction during Trump's speech is worth noting.

3. Risks and Uncertainties

• Does the slowdown in quantitative tightening indicate liquidity pressure in the financial system?

• If the Federal Reserve is concerned about bank liquidity issues, the market may underestimate the potential risks in the financial system.

• Uncertainties surrounding Trump's policies

• If Trump is elected, cryptocurrency regulation may become more relaxed, which would be beneficial for the market.

• But if the Biden administration remains in power, the current SEC regulatory trend may continue, and short-term policies may still be unstable.

• The market may be overinterpreting interest rate cut expectations.

• The current dot plot shows that there are divisions within the Federal Reserve; if the market bets too heavily on interest rate cuts, it may face a risk of a pullback in the future due to unmet expectations.