On April 1, 2026, there was a collective rebalancing of interest rate expectations in Europe and the United States. Goldman Sachs analysts downgraded their predictions for the Federal Reserve's future interest rate hikes, while the market generally expected that the European Central Bank has about 63 basis points of rate hike space left this year. On one side, geopolitical tensions and energy price disturbances continue to accumulate risks; on the other side, major central banks have chosen a more cautious observational stance in monetary policy. This misalignment constitutes the core contradiction of the current macro narrative: the shadow of inflation has not completely dissipated, yet decision-makers are no longer in a hurry to respond with more aggressive rate hikes. For crypto assets, the easing of interest rate expectations not only means relief from discount rate pressures, but may also reshape funds' sentiment and trading structures. However, whether this change is a sigh of relief or simply a pause before an adjustment still needs to be answered in the upcoming market feedback.

Geopolitical Shocks and Rising Oil Prices: Inflation is Not Out of Control

Recently, geopolitical tensions and frequent disturbances in energy supply have driven oil prices to rise temporarily, with the market once betting that the Federal Reserve and the European Central Bank would counter potential inflationary risks with more aggressive rate hikes. Particularly in an environment where energy price volatility is amplified, traditional logic often fears that "rising oil prices → inflation spreading → central banks forced to tighten more aggressively," which temporarily magnified concerns about continued rapid increases in future interest rates.

However, Goldman Sachs analysts offer a more measured assessment. In their view, the current scale of energy-related supply shocks is relatively limited, stating that "the current supply shock is small, and the possibility of widespread inflation spillover is low." This means that while oil prices have indeed risen and disturbed the inflation path, their impact is more localized and temporary rather than a systemic escalation. Thus, simply comparing this round of shocks to a scenario requiring significant second-round rate hikes to suppress a "new round of great inflation" is seen as an overreaction within Goldman Sachs's framework.

The key is to distinguish between supply shock-driven and demand-pull inflation. The rise in oil prices is more of a supply-side disturbance that raises costs and some price levels in the short term, but does not necessarily mean that internal demand is overheating; and central banks' significant rate hikes are mainly aimed at curbing demand. If the main source of inflation is supply bottlenecks rather than excessive demand, the marginal benefits of maintaining extreme aggressive rate hikes will quickly diminish, and might even lead to excessive pressure on the real economy before inflation has completely eased. This is where the market's expectation shifted from anticipating "violent rate hikes" to a consensus of "high levels of tightening but slowing rhythm."

Goldman Sachs Understands the Federal Reserve: Not to Tighten Solely for Oil Prices

Goldman Sachs stated a key point when assessing the Federal Reserve's reaction function: "The Federal Reserve typically does not tighten monetary policy solely in response to oil price shocks." This statement directly undermines the simplistic linear narrative of "rising oil prices = significant rate hikes again." For the Federal Reserve, the more critical issue is whether overall inflation expectations have become unanchored, whether demand is overheating, and whether financial conditions remain loose, rather than mechanically reacting to a single price indicator.

Within Goldman Sachs's framework, the current U.S. monetary policy is already in a relatively tight range: policy rates remain high, credit conditions have tightened, and asset price valuations have experienced significant compression. This means that even if oil prices bring additional inflationary pressures, the "additional suppression of inflation benefits" from further significant rate hikes, relative to potential side effects on employment, growth, and financial stability, is increasingly declining. The diminishing marginal returns has become one of the core reasons for Goldman Sachs downgrading their rate hike expectations.

In reality, U.S. inflation has shown signs of retreating from its peak, compounded by the previous series of rate hikes affecting financing costs and risk appetite, making financial conditions significantly tighter than during the easing period. Goldman Sachs thus outlined a relatively closed-loop logic: inflation is no longer out of control, financial conditions have tightened significantly, and policy rates are high, reducing the necessity of further raising rates. The transition from "continuing significant rate hikes" to "maintaining high rates and observing data" becomes a natural conclusion within this logic.

It is worth emphasizing that Goldman Sachs intentionally did not provide specific probability figures for each upcoming Federal Reserve meeting, but focused more on directional expectations—that is, "less additional rate hike space, slower pace." For market participants, understanding this analysis as a range and direction, rather than as precise predictions to decimal points, is an important premise for managing expectations.

The European Central Bank has Only 63 Basis Points Left: Hawks are Starting to Hesitate

On the other side of the Atlantic, market expectations for the European Central Bank were previously more "hawkish": in the face of rising energy prices and structurally weak economies, there were concerns that it would be forced onto a steeper rate hike path to maintain inflation targets and monetary credibility. This concern had once pushed forward pricing for euro interest rates and heightened worries about a hard landing for the European economy.

Now, mainstream expectations are cooling rapidly—several media outlets and institutions report that the European Central Bank is expected to raise rates by about 63 basis points this year. Compared to previous bets on a more aggressive path, this figure itself constitutes a significant contrast. Sixty-three basis points means that even if rate hikes continue, their intensity is far from "opening a new round of violent rate hike cycles," and is more akin to "gradually adjusting at high levels, watching and seeing."

The signal conveyed by "63 basis points" is that Europe is also deliberately avoiding excessively damaging the economy. Energy shocks, supply chain adjustments, and fiscal pressures have already put the Eurozone's growth outlook under pressure. If, against this backdrop, high-frequency, high-amplitude rate hikes continue to address residual inflation, the cost may be a deeper recession. Therefore, the European Central Bank’s main direction is gradually leaning towards "gradual + observational": recognizing the need to maintain a tightening stance, but remaining cautious about further aggressive tightening.

From a global perspective, both the United States and Europe simultaneously reducing the "steepness" of their future rate hike paths means that the dollar and euro interest rate differential expectations no longer expand significantly, and the upward space for global risk-free rates is being repriced. For risk assets, this often corresponds to two levels of meaning: first, the top of the discount rate is gradually becoming apparent, alleviating the extreme scenario of valuation compression; second, global liquidity expectations are shifting from "continuous withdrawal" to "maintaining at high levels," raising the lower limit of the survival environment for high-volatility assets (including crypto assets).

Chain Reactions in the Crypto Market: From Sentiment to On-Chain Behavior

In the macro narrative, the initial shift brought about by "easing interest rate pressures" is a change in emotional tone. Previously, in the face of consecutive rate hikes, high inflation, and geopolitical uncertainties, the crypto market exhibited a typical combination of "liquidity contraction + increased volatility," with funds adopting more short-sighted defensive strategies. When the market began to receive signals of Goldman Sachs downgrading rate hike expectations and the narrowing space for the European Central Bank’s rate hikes, the overall sentiment did not immediately turn to euphoria, but slowly transitioned from heightened tension to cautiously optimistic: concerns about extreme rate pressure have marginally weakened, yet vigilance regarding macroeconomic and regulatory uncertainties remains.

On-chain data also provides some corroborating evidence. According to reports, Bitcoin's average transaction fee has dropped below $0.40, significantly retreating from the highs during periods of congestion. The decline in fees indicates, on one hand, that there has been a moderation in the heat and congestion of on-chain transactions in the short term, with speculative high-frequency trading cooling off; on the other hand, it also means that the emotional influx from the high-volatility phase is gradually fading, with network activity returning to a more "normalized" pace. For observers, this can be seen as the market moving away from extreme panic, yet also reflects that risk appetite has not fully recovered.

Historical experience shows that during phases of easing interest rate expectations, crypto assets often undergo a transition from "risk-averse narratives" to "risk appetite recovery." Initially, some funds still view Bitcoin as an asset to hedge against macro uncertainties, leaning more towards long-term holding and defensive positioning; as expectations for rate peaks solidify and liquidity contraction slows, funds start to reassess the yield potential of high-beta assets, shifting trading structures from simple hoarding and defense to more complex leverage, options, and sector rotation strategies. This evolution typically does not happen overnight, but unfolds gradually through repeated games of macro data and regulatory signals.

Risks and Blind Spots: Easing Rate Expectations Do Not Equate to Unconditional Easing

It is important to remain vigilant that the current rebalancing of rate paths is built on the premise of "limited supply shocks and controllable inflation," and these premises are not unbreakable. The geopolitical situation and energy prices inherently carry high volatility and unpredictability. In the event of unexpected supply disruptions, escalations of conflict, or price spikes in the future, the Federal Reserve and the European Central Bank could shift back to a more hardline stance, causing market assumptions about the peak of interest rates to be revised.

Furthermore, Goldman Sachs's viewpoint is essentially based on market institution research, rather than any form of official path commitment. Regardless of how historically accurate Goldman Sachs's macro judgments have been, they cannot be equated to "the central bank has hinted at this course of action." Over-reliance of the crypto market on a single institution's expectations often amplifies price volatility when expectations deviate from reality—when expectation management fails, sharp repricing is likely to occur at the most relaxed moments.

The larger blind spot lies in that some research concerning macro and geopolitical issues still lacks sufficient long-cycle data validation. Many judgments regarding the scale of supply shocks, inflation spillover paths, and pressure points in the financial system can only provide "high probability" rather than "conclusions" based on limited samples. For investors, mistaking "expectations" for "facts" is one of the most dangerous cognitive errors: once scenarios in research reports are viewed as established outcomes, it becomes easy to amplify leverage and ignore tail risks when reality deviates, thus enlarging losses.

Returning from Interest Rate Games to Crypto Narratives: How to Build Your Own Framework

In summary, the current rebalancing of U.S. and European interest rate expectations revolves around the shift from the linear notion of "continuing significant rate hikes" to a new consensus of "being more patient and observant at high tightening levels." Goldman Sachs's downgrade of rate hike expectations, alongside the European Central Bank expecting to raise rates by about 63 basis points this year, outlines an environment where rates are nearing the cycle peak but still lack clear signals for rate cuts—this is neither the starting point of a new easing cycle nor the mid-point of extreme tightening panic.

For the crypto market, the mid-term logic aligns more closely with: marginal repair of funds' risk appetite, marginal alleviation of valuation pressures, but overall appearing more like a recalibration of macro pricing rather than the starting gun for a new bull market. In the short term, the volatility of crypto assets is still more a repricing of changes in interest rates, inflation, and regulatory expectations, rather than a completely independent market release from macro constraints. Whether new stories and new trajectories can sustain the "window of relief" brought by this round of macro easing will determine whether they can evolve into a genuine cycle kick-off.

On a strategic level, investors can focus on tracking several categories of subsequent clues: first are the central bank meeting statements and the changes in decision-makers' wording, to see how long "high-level observation" will be maintained and whether clearer hints of a rate cut window will emerge; second are the rhythms of inflation and energy data releases, particularly the combinations of oil prices, core inflation, and employment changes, to test whether the current "limited supply shocks" hypothesis holds up; third is the internal on-chain activity, capital flow, and derivatives leverage structure, observing whether the repair of risk appetite truly translates into sustained buying rather than merely short-term speculative trading on macro news. Only by incorporating these variables into long-term observation within one's own macro and crypto trading framework is it possible to maintain relative clarity amidst the oscillation of narratives and prices.

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