In March 2026, the Federal Reserve continued to maintain the federal funds rate range of 3.50%-3.75% after multiple meetings and released a signal indicating “maintaining high rates for a longer time, with a focus on observation.” The mainstream market expectation is shifting towards a more extreme scenario: according to judgments from institutions like HSBC, interest rates may remain unchanged overall in 2026-2027, meaning the cost of funds will be locked at high levels for at least two years. Within this timeframe, traditional risk assets — whether overvalued tech stocks or Bitcoin, viewed as a blend of growth and hedging narrative — must seek their survival under the same interest rate ceiling. The core contradiction is emerging: on one side is the tug between high interest rates and inflationary pressure, while on the other side is the divergent paths and misaligned performances of Bitcoin and technology assets in this environment.

Interest Rates Locked at High Levels: Dollar Strength Suppressing Risk Premiums

HSBC expects the Fed to maintain the 3.50%-3.75% rate range in 2026-2027, essentially telling the market that the “new normal” for the cost of funds has been established, significantly reducing the probability of a rapid return to an easing era. For global liquidity, this means that the risk-free return rate denominated in dollars will remain at relatively attractive levels for the next two years, forcing global capital to reassess the cost-performance ratio between “taking on risk” and “securing interest.” U.S. Treasury bonds and high-rated credit assets thus gain longer-term attractiveness, while the discount logic for high volatility and high valuation assets is systematically compressed.

On top of this judgement, HSBC provided another key clue — “Fluctuations in energy prices and geopolitical tensions will support demand for safe havens and strengthen the dollar.” The correlation between energy prices and inflation expectations, combined with geopolitical risks, leads to a phased increase in global risk aversion, resulting in capital flowing back from emerging markets and high-risk assets to dollar-denominated assets. This repatriation is not merely a panic reaction, but a “rational contraction” that occurs when dollar interest rates and demand for safe havens overlap: holding cash and U.S. dollar bonds suddenly becomes attractive enough, causing the funds directed towards crypto assets and high valuation tech stocks to shrink passively.

Long-term high interest rates directly impact asset pricing models: an increase in discount rates will depress the present value of future cash flows, with high-growth, high-imagination assets bearing the brunt. For Bitcoin, although there is no traditional cash flow, its “long-term value” still needs to be priced through investors' opportunity costs; when the risk-free return rate rises, the threshold for holding a high-volatility, non-fixed-return asset is raised. For tech stocks and AI leaders, high valuations are correlated with huge assumptions about future earnings and market space. In an environment where interest rates are locked at high levels, these assumptions are more likely to be discounted or even forced to retract. High interest rates thus become a unified yardstick, compressing the valuation space and imagination of different assets.

Iran Conflict and Oil Price Shock: Inflation Ignited Again

Entering 2026, U.S. military operations in the Middle East intensified tensions with Iran, and the fragile energy market was highly sensitive to this change. U.S. military actions → Geopolitical conflict escalation → Market concerns about supply disruption → Energy prices fluctuate sharply — this chain of events almost replays in a textbook manner. Each surge in oil prices fans the flames of global inflation expectations, making it even harder for cautious monetary authorities to find justifications for “easing.”

The rise in energy prices is not just a matter of living costs, but also an amplifier of inflation expectations. Once the market begins to bet that inflation may “rise again,” the Fed has even more reason to maintain the current 3.50%-3.75% rate range and even keep its language firm to avoid an “early pivot” that could trigger a new wave of inflation. High interest rates thus gain a new logical support: not merely to suppress already existing inflation data, but to set a higher firewall against inflation expectations that could rise again.

Against this backdrop of geopolitical risk, the safe-haven attribute of the dollar has been reignited. Every escalation of tensions in the Middle East brings a temporary rush for dollar assets, which in turn puts pressure on the narrative of “digital safe haven” within crypto assets. Bitcoin is indeed viewed at times as a tool to hedge against fiat currency and inflation risks, but when military aircraft take off, oil prices soar, and interest rates rise, large global funds first return to the dollar and U.S. Treasury bonds, rather than more volatile crypto assets. The result is that the traditional safe-haven framework centered on the dollar has the upper hand in reality, with Bitcoin's safe-haven narrative more often treated as a complementary option and long-term structural allocation, rather than the preferred tool in times of crisis.

Computing Power Decline: Bitcoin Mining's Self-Contraction in a High-Interest Environment

In the dual context of macro high interest rates and fluctuations in energy prices, noteworthy structural changes have also emerged within the Bitcoin network. Recent data shows that Bitcoin’s mining difficulty has been lowered by 7.76% to 133.79T, marking the largest decline since the end of 2025. A decrease in difficulty **indicates that there has been a significant decline in overall hash power over a period of time, with some miners exiting or reducing output, making it easier for remaining participants to mine blocks in the same timeframe.

The decline of miners is backed by the reality of dual pressures from energy costs and financing costs. The fluctuations in energy prices due to geopolitical conflicts directly push up electricity and operating costs; at the same time, the high-interest environment raises the cost of financing mining operations, expansion, and even routine turnover — whether through bank channels or via secondary market equity and debt, everything has become more expensive. In a phase where Bitcoin prices are flat or even declining, mining revenue lacks synchronous upward momentum while costs are pressured by rising interest rates and oil prices, weak miners can only passively shut down, sell equipment, and exit the network, leading to an overall contraction in hash power.

The mining ecosystem's response to the interest rate cycle exhibits a clear lag. The Fed entered a "high interest rate normal" in 2025, but miners’ adjustments often need to undergo a series of time processes such as financing renewals, contract expirations, and equipment depreciation; the real changes in difficulty are usually lagged by several months or even longer. The current 7.76% significant reduction is likely a concentrated release after the gradual accumulation of pressures from prior high interest rates and energy costs. In the short term, the decline in hash power may slightly improve individual miners' profitability and ease the pressure of further clearance; in the medium term, the elastic changes in mining supply will impact market expectations regarding “new coin output speed” and “miners' selling pressure rhythm,” thereby subtly influencing Bitcoin’s supply narrative and market sentiment — the cycles of reductions in output, difficulty adjustments, and interest rates contribute to a new macro structural background of the Bitcoin market.

AI Expansion Accelerates: Reverse Samples from OpenAI and Huawei

In stark contrast to monetary policy and the retreat of mining, some tech giants choose to continue accelerating expansion in a high-interest environment. Whether led by OpenAI among AI companies or hardware and infrastructure manufacturers boldly waving the flags in the fields of AI and storage, they continue to announce new products, frameworks, and ecosystem plans, with capital expenditure remaining high. This misalignment with the macro “tightening narrative” reflects tech firms’ extreme confidence in future earnings and market potential: even with rising capital costs, they are still willing to pay a higher price for future technological dominance.

In the AI software ecosystem, Jensen Huang calls OpenClaw “the most popular open-source project in human history”, indicating the attractiveness of AI infrastructure and development frameworks in the eyes of global developers and capital. A sufficiently foundational and universal AI framework can become a new “economic operating system,” like the internet protocol and smartphone operating systems, with its long-term cash flows and ecological value providing real support for high valuations. Despite high interest rates, the ability to continuously attract capital indicates that the market is willing to maintain a high tolerance and valuation multiples for this type of “platform-level technology.”

At the hardware and network level, Huawei's proposed new paradigm of “AI and storage mutual empowerment” emphasizes the collaborative evolution of computing power and data within the same architecture: the larger the AI models, the more extreme the demand for storage and data throughput, and conversely, advancements in storage technologies will release new possibilities for AI applications. This paradigm also requires substantial upfront investment and resonates naturally with the infrastructure development in the crypto industry regarding computing power, bandwidth, and storage — both are building foundations for a higher-density digital world. However, at the same time, limited global capital in a high-interest era must make choices: some funds that could have potentially flowed into crypto infrastructure, Layer 1/Layer 2, and mining equipment are instead absorbed by the more certain AI and cloud infrastructures that are easier to be accepted by regulatory and industrial policies, forming a funds diversion effect on the crypto industry.

Narrative Restructuring of the Crypto Market under the Shadow of the Dollar

When the dollar strengthens under the dual support of high interest rates and geopolitical risks, the role of crypto assets within the overall narrative is forced to adjust. Over the past few years, Bitcoin has often been packaged as “digital gold” against the backdrop of inflation and monetary easing, serving both as a hedge tool and a speculative target; now, in an environment where interest rates are locked at high levels and the dollar itself possesses both interest and safe haven attributes, the comparative roles of Bitcoin and dollar assets have become more complex. On one hand, higher rates increase the opportunity cost of holding Bitcoin, compressing its valuation premium as a high-risk asset; on the other hand, some investors still view it as a structural position to hedge against fiat system and geopolitical risks, with the narratives of hedging and speculation oscillating under the high-interest backdrop.

This round of mining difficulty decreased by 7.76% to 133.79T, with changes in hash power and shifts in capital preferences both acting on market narratives. Once the hash power shows substantive contraction, the market is likely to interpret it as a signal of “miners clearing out,” “weak hands exiting,” and “the network reaching a new balance,” thus adding a new footnote to the “digital gold” story: the supply side is forced to contract under pressures of interest rates and energy prices, and Bitcoin's output rhythm becomes more dependent on those larger miners and institutions with lower capital costs and more efficient operations, which would exacerbate the centralization and institutionalization of the Bitcoin network. Meanwhile, large funds are making trade-offs between dollar assets and crypto assets, with ETF, OTC allocations, and on-chain position reorganizations reshaping Bitcoin’s path from being an “experimental product for geeks” to a “constrained digital gold.”

In the context of long-term high interest rates, the focus of attention in the crypto field is beginning to shift from intense speculation on price levels to the repricing of infrastructure and application values. Infrastructure projects such as computing power, bandwidth, storage, cross-chain, and privacy are gradually being integrated into long-term capital expenditure frameworks similar to AI and cloud computing; the application layer is also moving from a purely speculative playground towards more realistic yield directions like compliant custody, payment settlement, and on-chain data services. Price fluctuations remain, but investors increasingly need to answer a question: in a world of high dollar rates and continuous expansion by tech giants, what segment of the value chain can the crypto industry occupy, and not just “how much more can it rise.”

Survival Scripts in the High-Interest Era: Who is Squeezed, Who is Restructured

In summary, the combination of long-term high interest rates and geopolitical risks is writing completely different fate scripts for various assets. The dollar has consolidated its position as the global anchor of funds under the double support of high interest rates and safe haven demand, gaining dual dividends of interest income and safe-haven attributes; most traditional risk assets and high-valuation growth stocks, however, are forced to endure rounds of valuation reassessments under the squeeze of rising discount rates and declining risk appetite. The Bitcoin mining ecosystem, facing "chronic squeeze" under the prolonged high levels of interest rates and oil prices, finds that the 7.76% difficulty reduction to 133.79T is just a representation; on a deeper level, hash power is shifting from marginal small miners to low-cost institutional miners with more ample capital, while the network seeks a new balance between decentralization ideals and real-world cost constraints.

Simultaneously, the divergence between tech giants and the crypto industry in terms of capital expenditure and narrative focus is becoming increasingly clear. Companies like OpenAI and Huawei continue to make significant investments in AI and storage, narrating a story that “even in the face of high interest rates, we must bet on the foundational technology of the future”; the crypto industry, on the other hand, gradually shifts from a singular price narrative to a long-term exploration of underlying infrastructure, security, and application scenarios amid price volatility and regulatory constraints. These two paths are not wholly parallel: in dimensions of computing power, storage, network architecture, and secure computing, AI and crypto infrastructures may encounter each other at some point in the future — for example, decentralized computing networks providing flexible resources for AI or on-chain data providing trusted data sources for AI applications. However, in the era of high interest rates, such intersections require clearer business models and return pathways to truly attract capital.

Looking towards the window period of 2026-2027 where “rapid interest rate cuts are not in sight,” crypto investors need to continuously track three categories of macro signals: firstly, changes in the Fed's policy path and inflation expectations — whether there are signs of marginal loosening in the interest rate range and whether energy prices continue to heighten inflationary pressures; secondly, the linkage between geopolitical risks and the energy market — the situation in the Middle East and oil price fluctuations will determine the strength of the dollar's safe-haven narrative and alter the market's acceptance of crypto assets' role as “digital safe havens”; thirdly, the relative strength of tech capital expenditure and investment in crypto infrastructure — whether AI, cloud, and semiconductors continue to siphon off funds or will form closer synergies with crypto infrastructure. Only by incorporating these macro signals into the same picture can investors gain insight into the true variables behind the misaligned competition between Bitcoin and tech stocks under the shadow of long-term high interest rates.

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