Federal Reserve Chairman Powell is at it again!
Last night (April 16), Powell's speech at the Chicago Economic Club directly caused the financial markets to explode: on one hand, he strongly stated that "there will be no interest rate cuts in May," even saying, "even if the market falls, there will be no market rescue," directly blaming Trump's tariff policy; on the other hand, he rarely extended an "olive branch" to cryptocurrencies, not only acknowledging their "mainstream reserve value," but also hinting that relevant bank regulations will soon be "partially relaxed."
On one hand, there is "ruthless indifference" toward traditional finance, and on the other hand, "gentle goodwill" toward cryptocurrencies. What key signals hidden behind Powell's "divided" speech can affect your wallet? How should ordinary people preserve their wealth amidst high interest rates and stagflation expectations? This article will break down three must-see points —
1. Powell's Hardcore Statement: No market rescue, no interest rate cuts, no scapegoating
1. Trump Scapegoat Guide: Tariffs drive up inflation, don’t expect me to bail out the market
"Trump's tariff policy is changing every day, and the Federal Reserve will not bail out the market!" Powell stated during a speech at the Chicago Economic Club, directly shifting the blame to Trump. He clearly stated that the current tariff policy is causing inflationary pressures to rise and economic growth faces uncertainties. Even if U.S. stocks plummet, the Federal Reserve will not immediately cut interest rates to bail out the market as in the past. This statement was like a heavy bomb, instantly igniting panic in the market.
Data shows that the PCE inflation rate in March was 2.3%, and core PCE reached 2.6%. The impact of tariffs on short-term inflation cannot be underestimated. Companies are importing in advance to cope with potential tariffs, resulting in strong imports in the first quarter, but it has dragged down GDP growth. Powell emphasized that the Federal Reserve will focus on preventing tariff-driven price increases from evolving into more persistent inflation, and will not easily intervene to rescue the market before inflation is effectively controlled.
2. Central Bank Independence Declaration: Don’t think the president can command me
Powell reiterated the independence of the Federal Reserve, emphasizing that its monetary policy decisions will not be influenced by political pressure. "The law gives us a mission, and the independence of the Federal Reserve is inviolable!" He implicitly referred to Trump's previous attempts to interfere with Federal Reserve decisions, clearly stating that the president cannot command the central bank's monetary policy.
Looking back at history, during the stagflation crisis in the 1970s, the Federal Reserve was politically interfered with and responded ineffectively, leading to years of persistent inflation. This time, Powell is determined to avoid repeating the mistakes, stating that the Federal Reserve will maintain a balance between promoting full employment and maintaining price stability, and will not be swayed by political factors.
3. Dollar Liquidity: Don't worry, we have backup
Although there has not yet been a large-scale shortage of dollars, Powell hinted that if a dollar shortage occurs globally, the Federal Reserve is prepared to provide liquidity support to central banks. He stated that the Federal Reserve is constantly monitoring the dynamics of the global dollar market and will take action when necessary to ensure the stability of dollar liquidity.
At the same time, Powell pointed out that it is not yet time to stop balance sheet reduction, and the Federal Reserve is still conducting quantitative tightening (QT), which means that the liquidity environment will continue to tighten. The balance sheet reduction will reduce the supply of dollars in the market, which will have a certain suppressive effect on asset prices and economic growth.
2. Unexpected Good News for Cryptocurrencies: Regulatory Relaxation, Mainstreaming Accelerates
1. Cryptocurrency is a good thing
Powell has made a 180-degree turn in his attitude toward cryptocurrencies, rarely affirming their value. He stated that cryptocurrencies "can be regulated and serve as a true circulating reserve." This statement undoubtedly opens the green light for cryptocurrencies like Bitcoin, meaning that the Federal Reserve's recognition of cryptocurrencies has significantly increased.
At the same time, both the Senate and the House are actively formulating a legal framework for stablecoins, which will accelerate the normalization process of the stablecoin industry. As a bridge between cryptocurrencies and fiat currencies, the improvement of the regulatory framework for stablecoins is of great significance for the development of the entire cryptocurrency market.
2. Bank regulation needs to be relaxed
Powell acknowledged that past regulations on banks related to cryptocurrencies were overly conservative, and in the future, there will be "partial relaxation." He emphasized the need to find a balance between ensuring safety and promoting innovation, so that consumers do not face excessive risks while maintaining the safety and soundness of banks.
This policy adjustment is a significant boon for the cryptocurrency industry. Crypto platforms like Coinbase may benefit from this, and the entry threshold for institutions will also be lowered. With the improvement of the regulatory environment, more traditional financial institutions may enter the crypto field, bringing more funds and resources to the market.
3. Market Volatility: Gold surges, Bitcoin holds strong
1. Gold Peak Signal: More people are borrowing to buy gold
Gold prices continued to surge after Powell's speech, breaking through $3050 to set a new historical high. However, behind this lies a huge risk. Recently, the phenomenon of borrowing to buy gold has become increasingly common, with many following the trend during the surge in gold prices, attempting to get a piece of the pie in this gold feast.
But Powell has already warned that inflation may become persistent, which undoubtedly sounds the alarm for the crazy gold market. Historical experience tells us that behind every surge in gold prices, there are often countless unfortunate investors. When there is a large phenomenon of borrowing to buy gold in the market, it often means that the top is not far away. Once the market trend changes, these investors chasing high prices may face huge losses.
2. Bitcoin: Whales are hoarding, $30,000 becomes the solid bottom
After Powell's speech, Bitcoin briefly fell by 2%, but quickly showed strong resilience and rebounded rapidly. On-chain data shows that Bitcoin continues to flow out of exchanges, with 5,000 coins flowing out just yesterday, indicating that whales are still continuously accumulating and hoarding.
Some analysts predict that after gold rises too high, some funds will shift to Bitcoin. Although the market will be affected by macroeconomic factors and experience volatility in the short term, the long-term upward trend of Bitcoin has not changed. The support level of $30,000 is very strong, becoming Bitcoin's solid bottom.
4. Investment Advice: How should ordinary people respond?
1. U.S. Stocks: Highly valued tech stocks are dangerous
Powell clearly stated that there will be no market rescue, which is undoubtedly a huge blow to highly valued tech stocks. In an environment of increasing market uncertainty, tech stocks are the first to suffer. Chip giants like Nvidia and AMD, as well as tech blue chips like Apple, Microsoft, and Tesla, have all seen significant declines in their stock prices recently.
If you hold U.S. stocks, it is advisable to underweight tech stocks and reduce the proportion of highly valued growth stocks. You can focus on inflation-resistant sectors such as energy and materials, which tend to perform better during periods of rising inflation. For example, energy stocks are expected to benefit from rising oil prices, and materials sectors, such as steel and non-ferrous metals, can also benefit in an inflationary environment.
2. Cryptocurrency: Regular investment in coins, small funds speculating in the primary market
Although the short-term market will experience volatility due to macroeconomic factors, the long-term upward trend of Bitcoin has not changed. If you are optimistic about Bitcoin's long-term potential, you can make regular investments with spare money to avoid chasing highs and selling lows. Regular investments can help you average your costs and reduce risks from market fluctuations.
Recently, the performance of primary market coins has been very impressive; for example, in the Bitcoin Eagle Telegram group, there were 3 meme coins that doubled, and 1 that increased by 5 times. If you have a certain risk tolerance, you can set aside a small amount of funds to participate in the primary market speculation, but be sure to pay attention to risk control and not invest too much.
3. Gold: Do not chase highs, allocation should not exceed 20%
Gold prices have surged recently, and the phenomenon of borrowing to buy gold has gone crazy, which is often a signal of peak. Although gold, as a safe-haven asset, has a certain value-preserving effect during market turbulence, the risk of chasing highs is currently very high.
It is recommended to allocate gold as a safe-haven asset, accounting for no more than 20% of total assets. If you already hold gold, you can appropriately reduce your holdings to lock in some profits. At the same time, in the long run, you can pay attention to emerging investment directions such as blockchain gold, as these innovative products may bring new opportunities for gold investment.
5. Conclusion: In turbulent times, have you grasped the anchor point?
Powell's speech released two signals: traditional financial uncertainty is increasing, but cryptocurrencies are gaining institutional recognition. In the future, Bitcoin may become a hedge against the collapse of dollar credit, while gold remains a safe-haven choice of the old system. Remember: before the end of the Federal Reserve's rate hike cycle, control leverage well and use regular investments to navigate through bull and bear markets. The anchor point of wealth in turbulent times may lie in the Bitcoin you overlook!
Investing involves risks; the views in this article are for reference only and do not constitute investment advice.
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