1. Analysis of core influencing factors: Adjustments to interest rate cut expectations. The current market generally expects the Federal Reserve to maintain interest rates unchanged (4.25%-4.50%), but focuses on the dot plot guidance for the number of rate cuts in 2025. If Powell clearly indicates only one rate cut in 2025 (previous market expectation was two), the expectation of tightening dollar liquidity will strengthen, forming a bearish outlook for risk assets. Conversely, if dovish signals are released (such as suggesting that recession risks may accelerate rate cuts), it could be bullish.
2. Interpretation of inflation and employment data: Recently, the core inflation in the U.S. remains above target (over 3%), and the unemployment rate stays around 4.4%. If Powell emphasizes inflation stickiness and downplays weakness in the labor market, a hawkish stance will suppress market risk appetite, and cryptocurrencies may face downward pressure. If he acknowledges the trend of inflation decline or risks in the unemployment rate, it may alleviate market concerns.
3. The connection between geopolitical issues and liquidity: Escalation of the situation in the Middle East (such as the risk of blockage in the Strait of Hormuz) could drive up oil prices and exacerbate inflationary pressures, forcing the Federal Reserve to extend the high interest rate cycle, indirectly bearish for cryptocurrencies. However, if the Federal Reserve indicates that geopolitical risks do not affect the policy path, the market may interpret this as short-term bearish sentiment being exhausted.
2. Potential market reaction scenarios
Scenario 1: Hawkish stance (probability 60%) Performance: Reiterates that inflation is above target, emphasizes a reduction in the magnitude of rate cuts to 25 basis points in 2025, suggesting that interest rates will remain high for a longer time. Impact: Dollar index rebounds, panic selling in the crypto market intensifies, Bitcoin may break below the support level of 103,000 USD and test the psychological barrier of 100,000 USD; Ethereum may test 2,400 USD.
Trading suggestion: Short on rallies in the short term, focus on shorting opportunities if BTC breaks 102,500 USD.
Scenario 2: Neutral stance (probability 30%) Performance: Maintains existing policy statements, does not clearly outline the rate cut path, emphasizes data dependency. Impact: Market volatility decreases, cryptocurrencies enter a consolidation phase, BTC may fluctuate in the range of 103,000-106,000 USD, ETH may fluctuate in the range of 2,450-2,550 USD.
Trading suggestion: Mainly wait and see, waiting for technical breakthrough signals.
Scenario 3: Unexpected dovish (probability 10%) Performance: Mentions of recession risks or inflation falling faster than expected, suggesting the possibility of early rate cuts. Impact: Weaker dollar, rapid rebound in the crypto market, BTC may challenge the resistance level of 108,000 USD, ETH may test 2,700 USD.
Trading suggestion: Build positions on dips, focus on BTC oversold rebound strategy (entry point 103,200-103,800 USD).
3. Comprehensive judgment and strategy suggestions Overall tendency: Short-term bearish > bullish. The current market has partially digested hawkish expectations, but if Powell strengthens the 'higher for longer' policy tone, cryptocurrencies will still face further correction pressure. Special attention should be paid to the following signals:
- Dot plot shows less than 1 rate cut in 2025
- More hawkish tone on inflation compared to June
- Geopolitical risks not mentioned as a drag on the economy