Powell's Speech and Federal Reserve Policy Details

1. Inflation risk tilted upward: Powell mentioned that inflation data disclosures are limited and the risks are tilted upward, which means the Federal Reserve will be more cautious with future easing policies and will not easily cut rates in response to short-term economic fluctuations, thoroughly breaking the market's illusion of "continuous large-scale easing."
2. Risk balance and reserve adjustments: In recent months, the risk balance has shifted, and reserve balances have fallen to comfortable levels. The Fed's bond purchases are solely for reserve management rather than quantitative easing, indicating that this policy adjustment is a "technical operation" rather than an increase in monetary easing, with limited actual impact on market liquidity.
Multi-level Impact on BTC
1. Short-term direct impact: Bearish dominance, increased selling pressure
The upward risk of inflation + signals of non-substantive easing will reinforce the "buy the rumor, sell the fact" pattern for BTC. Funds that entered due to rate cut expectations will accelerate their exit. BTC is likely to surge and then fall back or open lower in the early hours. Resistance levels above will further suppress the price, making effective breakthroughs difficult.
2. Medium-term sentiment impact: Continued cooling of risk appetite
The Fed's cautious stance on inflation will lead the market to form a consensus that "the pace of rate cuts in 2026 will be much slower than expected," suppressing long-term liquidity expectations for the crypto market. As the leader among risk assets, funds will be increasingly reluctant to allocate to BTC, and during subsequent volatility, the trading range may gradually shift downward rather than remain high and sideways.
3. Volatility characteristics: Sideways with a bearish bias, increased probability of spike moves
In the early hours, low liquidity combined with mixed signals of "hawkish inflation + neutral reserve management" will cause BTC prices to briefly rebound after sharp drops, increasing the frequency of spike-like moves.
Although reserve management is a technical operation and not a substantial bearish signal, it will dampen market expectations for "policy support," and buying momentum during corrections will be weaker than before. The risk of breaking key support levels will increase.
4. Capital behavior impact: Institutional holdings tend to be conservative
Risks of rising inflation and policy disagreements will make institutions more cautious with BTC holdings, avoiding large-scale accumulation. On-chain trading will mainly involve retail and short-term funds. The trend-driven upward movement of BTC lacks the backing of major capital, making large-scale short-term rallies unlikely.