The latest FOMC meeting lowered interest rates as expected, but the forward guidance did not clarify the direction of subsequent policies, instead signaling a 'pause period' for policy. Although there has been frequent talk of the 'Federal Reserve restarting balance sheet expansion' recently, the reflection of such uncertainties in current pricing remains limited when looking at interest rate pricing and asset performance. Powell's statements at the press conference leaned towards caution, and coupled with early signs of a weakening labor market, indicate that the current macro environment has changed significantly from the beginning of the year. Against this backdrop, Bitcoin has broken below key long-term trend indicators for the first time in this bull market, and the market structure is beginning to shift. The market is gradually transitioning from the previous single trend to a more complex phase that relies on rhythm judgment and risk control.
Confirmation of policy pause: macro marginal weakening, liquidity expectations further cooling.
Although the Federal Reserve has completed interest rate cuts, the overall tone of the post-meeting statement is hawkish, with only one rate hike expected in 2026, and the next one delayed until 2027. This arrangement sends a clear signal of a 'policy pause,' highly similar to the situations in 2019 and 2024—Bitcoin often strengthens before the meeting and gradually weakens after the interest rate cut is implemented.
Recently, the market has frequently mentioned the 'Federal Reserve restarting balance sheet expansion,' but it is important to note that the 'technical' purchase of $40 billion in Treasury bills each month does not constitute quantitative easing. Its core role is to hedge against liquidity recovery brought about by quantitative tightening and factors such as the increase in the Treasury's general account and the decrease in reverse repo balances, rather than providing trend support for risk assets. Against the backdrop of continuously lowering interest rate expectations, cooling real estate, and rising unemployment rates, macro positive momentum is weakening.
Technical signals resonate with political cycles: the rhythm of the bull market is facing tests.
For Bitcoin, this round of macro turning points coincides with key technical signals. Since the start of the fifth round of the bull market, the price has first fallen below the 12-month moving average. In the past three cycles, this signal has corresponded to the end of the bull market phase, often appearing within about a year before the US mid-term elections.
From a longer cycle perspective, it is more inclined to attribute Bitcoin's four-year rhythm to political cycles rather than the halving event itself. Historical experience shows that in the months leading up to the mid-term elections, Bitcoin often performs relatively under pressure, with increased volatility. Currently, the US stock market is still near historical highs, with the 10-year Treasury yield stabilizing at around 4%, and both fiscal and policy space are constrained, making true policy support seem distant.
Overall, the short-term rebound of Bitcoin does not mean that a new round of bull market has begun. The macro environment remains weak, liquidity is still tight, and unemployment risks are rising, combined with the politically sensitive period before the mid-term elections, making this stage more prone to high volatility and back-and-forth movements. In the current environment, compared to betting on a single trend, the market needs to respond flexibly and manage positions. A bull market will eventually come, but before that, opportunities are more likely to come from grasping the cyclical rhythm rather than assuming that the market will quickly return to the previous bull market channel.
Some of the above views come from Matrix on Target. Contact us to obtain the complete report from Matrix on Target.
Disclaimer: The market carries risks, and investments should be made with caution. This article does not constitute investment advice. Trading in digital assets may involve significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions based on the information provided herein.
