Gu Jingci: The Fed's Interest Rate Decision on March 18th and Its Impact on the Crypto Market

The Fed's interest rate decision will be released at 2:00 AM, followed by Powell's monetary policy press conference at 2:30 AM, directly influencing the next round of price movements in the cryptocurrency market. Firstly, the Fed's rate decision is expected to maintain the current interest rate range of 3.5-3.75%, with a zero probability of a rate cut – a consensus widely held. The key focus is on the core of the dot plot: the December dot plot projected one rate cut in 2026, while this decision hinges on whether it will be revised to two or zero cuts. If there are zero cuts, and Powell's speech is hawkish, emphasizing sticky inflation, data dependence, and a lack of urgency for rate cuts, along with upward revisions to inflation expectations and downward revisions to GDP growth, reinforcing the idea of prolonged high interest rates, then the short-term outlook is bearish. Conversely, if there are more dovish rate cuts or even earlier cuts, the dollar and US Treasury yields will decline, leading to capital inflows, increased risk appetite, and a continued surge in the cryptocurrency market. A zero-rate-cut dot plot equals increased expectations of tightening liquidity, a stronger dollar, and higher US Treasury yields. In a high-interest-rate environment, funds prefer the dollar and US Treasuries, squeezing out new capital inflows into the cryptocurrency market. The market is sensitive to price delays in interest rate cuts, exhibiting a "buy the rumor, sell the fact" mentality, which can easily lead to an initial drop followed by consolidation. If only one or more rate cuts are implemented, the market is likely to be dovish, with the negative news already priced in, resulting in a small rebound or a significant continued rise followed by consolidation. Pay attention to Powell's key words in his speech early this morning: "sticky inflation" and "data-dependent" will indicate a hawkish stance; "conditions for a rate cut are ripe" will indicate a dovish stance.