The Federal Reserve announced a slowdown in quantitative tightening (QT) in April, interpreted as a signal of de facto easing. Powell's dovish remarks calmed market sentiment. On Monday, U.S. stock indices opened, with the Nasdaq rising 2% during the session, the S&P 500 rising 1.4%, and the Dow Jones rising 1%. Last week, the S&P 500 rose 0.51%, ending a four-week losing streak; the Nasdaq slightly rose 0.17%, ending a four-week losing streak. The probability that the Fed will maintain interest rates until June is only 18.1%, while the probability of cumulative rate cuts of 25 to 50 basis points is 81.9%.

Back to the point:

The Federal Reserve's audited financial report shows that the Fed's operational loss for the entire year of 2024 reached $77.6 billion, marking a huge loss for the second consecutive year. Analysts believe that the main reason for the Fed's massive losses is the aggressive interest rate hikes from 2022 to 2023. When the Fed can return to profitability depends on its subsequent rate-cutting path. The New York Fed's forecasts indicate that if short-term interest rates remain above 4%, the Fed will continue to incur losses this year; if rates continue to decline, the Fed may achieve profitability. The International Monetary Fund (IMF) released the seventh edition of the Balance of Payments Manual (BPM7) on March 20, which for the first time includes digital assets such as cryptocurrencies in its global economic reporting framework, classifying them further based on whether they carry related liabilities: unbacked assets like BTC are classified as non-productive non-financial assets, categorized under the capital account; stablecoins and other liability-backed digital currencies are viewed as financial instruments; platform tokens like ETH and SOL may be classified as equity-like instruments; staking and cryptocurrency yield activities are considered sources of dividend income; mining and staking-related services are recognized as exportable computer services. Fidelity will launch a tokenized fund investing in U.S. Treasury bonds, competing with BlackRock's BUILD. Last Saturday, the ETH network only destroyed 53.07 ETH in a single day, marking an all-time low, indicating a significant decrease in demand for ETH block space.

On March 24, the cryptocurrency Fear and Greed Index was at 45 (compared to 30 yesterday), indicating a significant easing of market panic. According to Coinglass data, current mainstream CEX and DEX rates show that the crypto market has returned to a neutral stance, no longer being fully bearish, but also not bullish. IntoTheBlock states that BTC prices are rebounding, but short-term holders have not yet returned, with the current number of short-term holders at only 2.53 million, down from 3.06 million in January; an increase here could signal early interest in BTC. Matrixport analysis indicates that BTC is attempting to break through a downtrend, benefiting from a slightly dovish stance from the Fed and Trump's hints at a more targeted tariff strategy, which provides a more constructive environment for the market. As the end of the quarter approaches, the selling pressure from arbitrage funds may be easing, and most of the selling is nearing its end. Although current catalysts are still insufficient to support BTC in creating new historical highs, the market outlook has significantly improved. QCP states that U.S. stock indices are leading a modest recovery in the cryptocurrency market; although worries about an economic recession persist, Powell's comments last week calmed investor sentiment. The cryptocurrency Fear and Greed Index improved from 32% last week to 45% this week (49% is neutral), reflecting a general easing of sentiment. BTC ETFs purchased 8,775 BTC last week, showing early signs of liquidity returning to the crypto market. The tariff escalation effective April 2 may again pressure risk assets.

Analyst Nicolai Sondergaard states that global tariff concerns will continue to exert pressure on the cryptocurrency market, at least until April 2, until tariff-related worries are resolved, which may happen between April 2 and July, when the market could welcome positive catalysts. Last week, net inflows into digital asset investment products reached $644 million, ending five consecutive weeks of net outflows, with BTC leading the recovery, attracting $724 million in inflows, while ETH saw an outflow of $86 million. Last week, the S&P 500 rose 0.51%, ending a four-week losing streak; the Nasdaq slightly rose 0.17%, ending a four-week losing streak; the Dow Jones cumulatively rose 1.2%, marking the largest weekly gain in over two months. BitMEX co-founder Arthur Hayes stated that BTC will first break through $110,000 before backtesting $76,500, with the Fed transitioning from tight monetary policy (QT) to quantitative easing (QE), focusing on government bonds, as tariffs are unimportant due to "transitory inflation," as Powell said. ARK Invest founder Cathie Wood noted that Powell's dovish statements made Wall Street sense that if the U.S. economy deteriorates, the Fed will lower rates to "backstop" the economy, and inflation cooling in the second half of the year will release more easing space, with rate cuts possibly exceeding 2 to 3 times. Cathie Wood believes that the U.S. has entered a rolling recession but expects the Fed and Trump to take action soon. ARK Invest has recently been bottom-fishing Tesla, Coinbase, and Robinhood, among other crypto-related assets, firmly believing that technological disruption will bring about benign deflation.

The dovish comments from the Fed's meeting and Trump's statements on tariff flexibility boosted market confidence. On Monday, U.S. stocks opened, with the Nasdaq rising 2% during the session, the S&P 500 rising 1.4%, and the Dow Jones rising 1%, while BTC rose 4% and ETH rose 4.5%. Fed's Williams stated that there are no signs indicating that inflation expectations are losing stability, and the recent rise in inflation will dissipate, expecting U.S. GDP growth this year to slow compared to 2024. Fed's Goolsbee remarked that economic slowdown will become the reason for rate cuts, but if inflation exceeds tariff levels or expectations, the Fed will have to adjust its outlook. During last week's meeting, Powell repeatedly emphasized that the uncertainty of the economic outlook is extremely high, stating that price increases caused by Trump's tariffs will be temporary, thereby easing market tension. According to Fed observations: the probability that the Fed will maintain interest rates until June is only 18.1%, while the probability of cumulative rate cuts of 25 to 50 basis points is 81.9%. The Fed announced a slowdown in quantitative tightening (QT) in April, interpreted as a signal of de facto easing, with BTC rising to $88,000. Last week, among the top 70 companies holding BTC, 5 companies increased their BTC holdings by a total of 7,349 BTC, with Strategy increasing by 6,911 BTC. This Friday, the Fed's preferred PCE price index will be released, with a previous value of 2.5% and an expected value of 2.5%; the core PCE price index had a previous value of 2.6% and an expected value of 2.7%. Powell's dovish statements last week, if indicative of the Fed's rate outlook, make June a possible time to restart rate cuts (currently with an 81.9% probability), and the market is expected to recover the declines caused by earlier expectations of a pause in rate cuts. Regarding rate outlook, the expected future rate cuts still far exceed the earlier rate cuts. Previously, rates were cut by 100 basis points to 4.25 - 4.5%, which is 150 basis points away from achieving a neutral rate of 3%. The push for rate cuts is hoped to bring about a significant increase in the future.