Family, who understands! This drama of 'changing the head of the Federal Reserve' in Washington has turned from 'Powell's critical condition notice' into a continuous series of 'sitting firmly on the fishing platform' 🤯 Not long ago, there were rumors that the probability of him packing up and leaving before the end of May soared to over 70%, and market gamblers were about to wear out the script for the 'post-Powell era.' As a result, there has been a dramatic turnaround, and this old guy not only hasn't cooled down but is actually in a more secure position than before!
The core CPI just delivered a 'lower than expected' report, and the investigation by the Department of Justice has become a stroke of genius. Don't think the investigation is meant to bring him down; in my view, it actually gives Powell a layer of 'political protection.' The market never votes with words; real money has already given the answer: the probability of him leaving in the short term has plummeted, in other words, capital has already tacitly accepted the fact that 'Powell is firmly stuck in his position for the short term.'
Many people are confused as to why things seem more stable the more they investigate. This leads us to discuss the underlying logic of the Federal Reserve; its independence is its lifeline. Now is not a good time for a change: on one hand, inflation seems to be cooling (December core CPI year-on-year at 2.6%), but it is extremely sticky, with service items and food prices still secretly gaining strength; on the other hand, the tug-of-war between the White House and the Federal Reserve is already out in the open. Trump is eager to cut interest rates to boost the economy and reduce debt costs, while Powell insists on a 'wait-and-see' approach. After three consecutive cuts from September to December last year, he directly pressed the pause button at the beginning of this year. Forcing a change at this time would mean telling the world that 'the Federal Reserve has been politically hijacked,' which would lead to chaos in the dollar, U.S. Treasuries, and U.S. stocks, and no one in the global financial market can withstand this turmoil.
More crucially, the enthusiasm for Trump’s candidates has cooled significantly. Previously praised 'insiders' are now not even trusted by the market; everyone knows that Powell, who is hawkish and adheres to rules, can more effectively stabilize expectations than successors with clear political leanings. After all, there have been serious divisions within the Federal Reserve, with the December interest rate meeting last year seeing the most dissenting votes in three years. If we replace the leader with someone who prioritizes politics, policy continuity will drop to zero, and in a market like crypto that is extremely thirsty for certainty, things will only get worse.
As a veteran in the crypto circle for many years, I dare assert: As long as Powell sits steadily on the fishing platform, and even if he goes until 2028 when his term ends, these three things in the crypto world are basically set in stone. Everyone must remember this!
First, don't expect interest rate cuts to be 'one step to success.' Goldman Sachs predicts a 25 basis point cut in June and September this year, but this is the most optimistic scenario. Given Powell's cautious character, he will never engage in 'flood irrigation' before inflation firmly stabilizes at the 2% target. Currently, the market bets that the probability of maintaining interest rates in January is as high as 97.2%, which means that liquidity easing is 'toothpaste-style,' and thinking about relying on interest rate cut expectations for brainless rallies is unrealistic in the short term.
Second, internal policy friction will become the norm. The White House wants to stimulate the economy to secure votes, while the Federal Reserve aims to maintain financial stability and prevent inflation from rebounding. This tug-of-war will run throughout the year. For the crypto world, this means repeated fluctuations in news: sometimes being pulled up by 'interest rate cut rumors,' and sometimes being smashed down by 'hawkish statements.' Volatile markets will become the mainstream, and chasing highs and lows will only lead to repeated losses.
Third, the 'emotional bull' is completely over. The previous kind of crazy market where people would all in at the mention of interest rate cuts, regardless of the fundamentals, is essentially a bubble created by excessive liquidity. Now, Powell has tightened the liquidity valve, and without incremental funds entering the market, it is impossible to support a big bull market relying solely on market sentiment. The quality of the underlying assets will be further tested; worthless coins will be eliminated faster, while quality sectors can only stand firm amidst fluctuations.
In summary: The macro chaos continues, but the policy bottom line is becoming clearer. Powell's 'stability' is the antonym of the biggest 'uncertainty' in the crypto world in the short term, but it is also an explicit signal for long-term bearishness. Sticky inflation, policy games, and tightening liquidity are three mountains pressing down, making it difficult for the crypto world to achieve major breakthroughs.
Finally, a reminder: Don't be misled by short-term market trends. What matters now is not who is boldest, but who can see further. I have already organized the schedule for the Federal Reserve's interest rate meetings in 2026 and the core inflation tracking indicators. Follow me@链上帝王 #加密市场观察 $ETH
