Trump's "policy fog" + Powell's problem, the market is waiting for breath

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

The financial market is facing many uncertainties. What's special about this meeting is that it will comprehensively evaluate the impact of a series of new policies of the Trump administration on the U.S. economy, and 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 consolidation

and decline

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 was around $82,715, down 1.5% in the past 24 hours.

Mainstream currencies such as Solana, Ethereum and XRP have seen more significant declines. The U.S. stock market is also under pressure, with both the Nasdaq and the S&P 500 falling. Concerns that the Fed may not immediately relax policy are increasing, and although inflation data slowed in February, the magnitude was not significant and only a single-month data.

The Fed is likely to remain silent, but the "dot map" has hidden mystery

The market generally expects that the Federal Reserve will maintain the current target range of 4.25%-4.50% of the federal funds rate unchanged. Judging from the FedWatch tool of CME Group, traders believe that the possibility of a rate cut in March is slim.

Earlier, Fed officials have repeatedly stressed that it will adopt a "wait and see" attitude, partly because of the significant uncertainty brought about by President Trump's economic policies, which have begun to affect corporate and consumer confidence and triggered stock market declines and concerns about a recession.

The focus of this meeting will be the "Economic Forecast Summary" released along with the policy statement, especially the highly-watched "Dot Map". This chart will show the median forecast of future federal funds rates by 19 committee members and is an important basis for market speculation of future interest rate paths.

Although Nomura Securities analysts expect that the median forecast of this "dot map" will not change much, considering the tension in market sentiment and uncertainty about future interest rate cuts, any subtle adjustments may trigger severe market fluctuations.

Under Trump's "policy mist": Shadow of stagflation is shrouded, Wall

Street sounds the alarm

Recent economic data and market sentiment have shown that analysts are beginning to worry about the risk of "stagflation", which means that once bad news appears in the economy in the future, U.S. stocks may also fall.

Simply put, everyone is worried that Trump's policies may lead to slowing economic growth and rising prices, 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 U.S. economic growth, mainly because they believe that the Trump administration's restrictive trade and immigration policies may have adverse effects on the economy.

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

How does the Fed expectation affect the crypto market?

Cryptocurrencies such as Bitcoin are often regarded as "risk assets" and their price trends are closely related to investors' risk preferences. In a high interest rate environment, relatively secure assets such as bonds are more attractive, which can lead to funds flowing out of 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 expected potential negative news.

Economic uncertainty and global tensions could exacerbate bearish pressure on cryptocurrency markets, according to forecasts by Polymarket participants. Polymarket data shows that Bitcoin is 51% likely to close this week between $81,000 and $87,000.

Summarize

The Fed's policy statement and Powell's speech will undoubtedly set the tone for the short-term trend of the cryptocurrency market. Dove signals may ignite hope for a rebound in the market, while hawkish stances may extend the current downtrend. In the case where market sentiment is already pessimistic, any slightly positive signal may become a catalyst for price increases. However, for cryptocurrency investors, being alert and cautious is always the best strategy to deal with market volatility.