Trump's "policy fog" + Powell's problem - the market is hesitant

Author: BitpushNews Mary Liu

In the early morning of March 20, Beijing time, the Federal Reserve will announce the latest interest rate decision, and then Chairman Powell will hold a press conference, and the global market will hold its breath.

Financial markets are facing many uncertainties. The special feature of this meeting is that it will comprehensively assess the impact of a series of new policies of the Trump administration on the US economy. Fed policymakers will discuss the progress of inflation control and decide whether to adjust monetary policy.

The market has been under pressure in advance, and Bitcoin has consolidated and fallen

The optimism lasted for a few days, and the risk market fell again before the Fed's interest rate meeting. As of press time, the price of Bitcoin is about $82,715, down 1.5% in the past 24 hours.

Solana, Ethereum and XRP and other mainstream currencies fell more significantly. The U.S. stock market was also under pressure, with both the Nasdaq and S&P 500 falling. Market concerns that the Fed may not immediately ease policy are growing. Although inflation data in February slowed down, the magnitude was not significant and it was only a single-month data.

The Fed is likely to remain on hold, but the "dot plot" hides mystery

The market generally expects that the Fed will maintain the current federal funds rate target range of 4.25%-4.50% unchanged. According to CME Group's FedWatch tool, traders see little chance of a rate cut in March.

Fed officials have repeatedly stressed their "wait-and-see" approach, in part because President Trump's economic policies have created significant uncertainty, which has begun to affect business and consumer confidence, and has triggered stock market declines and recession concerns.

The focus of this meeting will be the Summary of Economic Projections released with the policy statement, especially the much-watched "dot plot". This chart will show the median forecast of the future federal funds rate by the 19 committee members, and is an important basis for the market to speculate on the future path of interest rates.

Although Nomura Securities analysts do not expect the median forecast of the "dot plot" to change much, given the nervous market sentiment and uncertainty about future rate cut expectations, any slight adjustment could cause sharp market fluctuations.

Under Trump's "policy fog": the shadow of stagflation looms, Wall Street sounds the alarm

Recent economic data and market sentiment show that analysts are beginning to worry about the risk of "stagflation", which means that if there is bad news about the economy in the future, US stocks may also fall.

In short, everyone is worried that Trump's policies may lead to slower economic growth and rising prices at the same time, which is "stagflation". Wall Street institutions have begun to worry about this and adjust their expectations.

Several institutions, including JPMorgan Chase, Goldman Sachs and Morgan Stanley, have recently lowered their expectations for US economic growth, mainly because they believe that the Trump administration's restrictive trade and immigration policies may have an adverse impact on the economy.

Let's look at inflation. Although the February price index showed a slowdown in inflation, Goldman Sachs economists pointed out that the Fed may have to reconsider their inflation forecasts, given that the Trump administration has already started to impose tariffs and may increase them in the future. Goldman Sachs even predicted that the Fed may raise the core inflation rate to 2.8% in its economic forecast for 2025, while lowering the GDP growth rate to 1.8%, mainly due to the impact of tariff policies.

How does the Fed's expectations affect the crypto market?

Cryptocurrencies such as Bitcoin are often regarded as "risk assets" and their price movements are closely related to investors' risk preferences. In a high-interest environment, relatively safe assets such as bonds are more attractive, which may lead to capital outflows from high-risk assets such as cryptocurrencies. Currently, the price of Bitcoin is hovering around $83,000, and the market sentiment index is still in the "fear" range, which may mean that the market has already anticipated potential negatives.

According to the predictions of Polymarket participants, economic uncertainty and global tensions may increase bearish pressure in the cryptocurrency market. Polymarket data shows that there is a 51% probability that Bitcoin will close between $81,000 and $87,000 this week.

Summary

The Fed's policy statement and Powell's speech will undoubtedly set the tone for the short-term direction of the cryptocurrency market. Dovish signals may ignite hopes for a market rebound, while hawkish stances may prolong the current downtrend. With market sentiment already pessimistic, any slightly positive signal may become a catalyst for price increases. However, for cryptocurrency investors, vigilance and caution are always the best strategies to deal with market volatility.