The Fed's March meeting "releases the dove", and the turning point in the crypto market has arrived?

Author: Bright, Foresight News

On March 19, US time, the Federal Reserve ended a two-day monetary policy meeting on the 19th and announced that the target range of federal funds rate was maintained between 4.25% and 4.50%, in line with market expectations.

The cryptocurrency market rose in response, and Bitcoin’s four-hour line level showed a "nine consecutive positives", with the highest point reaching US$87,453.67. Ethereum strongly broke through the volatility range, breaking through the US$2,000 mark, and the highest point reached US$2,069.90. Market liquidity expectations have improved relatively.

As of 13:00 on March 20, the entire network had a liquidated $355 million in the past 24 hours, a liquidated $257 million in the short position, and a liquidated $97.7425 million in the long position, mainly short position. It is worth noting that before the Federal Reserve's FOMC meeting, Ethereum's rise and breakthrough caused the amount of Ethereum's entire network to exceed Bitcoin.

Powell: The Fed needs "technical adjustment"

The Federal Reserve held its troops as scheduled, but it sent a lot of dovish signals. Federal Reserve Chairman Powell mentioned "uncertainty" 16 times in an hour in his speech at the White House press conference, repeatedly emphasizing the uncertainty of the U.S. economic outlook.

Compared with the January interest rate meeting, the Fed removed the statement of "a roughly balance of risks to achieve employment and inflation targets" in its statement and raised its core PCE inflation forecast for 2025 to 2.8%. This adjustment may suggest that the Federal Reserve's confidence in a soft economic landing has weakened, and global markets have begun to bet on future interest rate cuts.

At the same time, since April, the monthly reduction cap of US Treasury bonds has dropped sharply from US$25 billion to US$5 billion, and the MBS reduction cap has maintained US$35 billion. Although Powell called the move a "technical adjustment", the market interpreted the Fed's move to sharply slow down its balance sheet shrinking pace as quantitative tightening (QT) has entered the final stage. For a time, U.S. Treasury yields fell by 8-11 basis points, gold broke through $3,050/ounce to hit a record high, and the U.S. Nasdaq and Dow rose.

Trump: Cut interest rates immediately!

Trump posted on Truth Social after the FOMC meeting: "As the U.S. tariffs begin to transition to the economy (easing!), the Fed would better cut interest rates. April 2 is U.S. Liberation Day!!"

Trump has strongly demanded the Fed to "reduce interest rates immediately" and accused the high interest rate policy of being a continuation of "Biden inflation." Last month, Trump posted on Truth Social, saying, "Interest rates should be lowered, which will work hand in hand with the upcoming tariffs!!" It can be seen that the core logic is: interest rate cuts can reduce the government's debt costs by up to 36 trillion yuan, while cooperating with tariff policies to promote the return of manufacturing.

Earlier, Trump's national economic adviser Hassett publicly stated that the White House forecasts economic growth rate to be 2.5% in 2025, far higher than the Federal Reserve's latest 1.7% forecast. The divergence stems from Trump's optimism about tariff policies—he believes protectionist measures can "revitalize manufacturing", but economists warn that it could trigger a global trade war, pushing U.S. inflation to more than 2.5%. Fitch Ratings noted that Trump's tariffs and "huge uncertainty" surrounding tariffs are two drivers behind the potential economic slowdown and short-term price increases. This uncertainty is likely to freeze any Fed rate cuts, causing widening divisions between Trump and the Fed.

Crypto season change: slow recovery

In the crypto-native market, recent positive news at the regulatory level has driven the first recovery of some currencies, and may further promote the market to warm up under the premise of macroeconomic relaxation.

On March 12, the direct positive stimulus of Abu Dhabi's sovereign fund investing in Binance of US$2 billion led to the BNB and BSC ecosystems taking the lead in carrying the banner of recovery on the crypto chain and giving birth to a phenomenal BSC Meme market with a market value of more than US$200 million. On March 19, according to DeFiLlama data, the transaction volume of BSC Eco-DEX in the past 24 hours reached US$2.664 billion, surpassing Ethereum's US$1.356 billion and ranking first.

On the evening of March 19, the positive news of "US SEC will give up appealing Ripple" directly stimulated XRP to rise 11.46% in a short period of time, reaching a high of US$2.59. On March 20, Ripple CEO Brad Garlinghouse revealed in an interview with Bloomberg that the XRP ETF is expected to be listed by the end of 2025. It also said that Ripple Labs' IPO is not impossible.

Regarding the market outlook, BitMEX co-founder Arthur Hayes tweeted on X, "Powell has fulfilled his promise and the quantitative tightening (QT) basically ends on April 1. Next, if we want to truly push the market into a bull market, we must either restore the supplementary leverage ratio (SLR) exemption policy or restart quantitative easing (QE). $77,000 may be the bottom of Bitcoin, but the stock market may have to experience another fluctuation before Jay (Powell) will completely turn to the Trump team."

Wall Street traders have already started betting on interest rate cuts in June and July. But in the short term, those who are still in the crypto market should remain flexible. After all, the "Sword of Damocles" that came into effect on April 2 is still high. Perhaps, it's time, as Arthur Hayes said, "have cash on hand."