Affected by the decisions of the seven major central banks and geopolitical conflicts, Bitcoin may face a critical directional choice next week.
According to CoinDesk, global financial markets will experience an intense wave of central bank meetings next week. Seven major central banks, including the Federal Reserve, will announce their interest rate decisions from March 17 to 19, alongside surging oil prices triggered by the Middle East wars, which are reigniting market concerns about global inflation.
The schedule for next week's intensive central bank decisions is as follows:
First is the interest rate decision by the Reserve Bank of Australia (RBA) on March 17; followed by the interest rate decisions of the Bank of Canada (BOC) and the Federal Reserve (Fed) on March 18; and finally, the interest rate decisions of the Bank of Japan (BOJ), Swiss National Bank (SNB), and European Central Bank (ECB) on March 19.
Previously, the market generally expected major central banks like the Federal Reserve to steadily lower interest rates or maintain an accommodative stance, coupled with the rise of AI technology in the U.S. seen as a potential deflationary force, this expectation once provided strong support for risk assets like Bitcoin.
However, since the U.S. launched military strikes against Iran on February 28, Middle Eastern energy transport has been obstructed, and rising oil prices have reignited inflation concerns in the industry, forcing traders to reassess the impending global central bank interest rate decisions.
Currently, policymakers are caught in a dilemma. Based on the lessons learned from their erroneous judgments in 2021-2022 that led to temporary inflation, they may lean towards taking swift action to curb price pressures. Therefore, if central banks release hawkish signals next week, risk assets like Bitcoin could face significant downward volatility.
Yet, economists point out that in the face of oil price shocks, the Federal Reserve typically observes inflation levels before making loss assessments, as oil plays a critical role in the modern economic system.
However, although the impact of oil prices raises inflation while suppressing economic growth, such shocks are characterized by their temporary nature, and the Federal Reserve is also reluctant to hastily adjust interest rates due to misjudgments in the situation, leading to an awkward situation of being forced to reverse course weeks later.
According to historical patterns, only the interest rate decisions of the Federal Reserve and the Bank of Japan can have a substantial impact on Bitcoin prices.
But with the imminent intensive communications from global central banks, coupled with soaring oil prices and the persistent shadow of inflation, Bitcoin may face a true stress test next week.