Written by: Blockchain Knight

The focus on Wall Street has shifted completely from when the Federal Reserve will lower interest rates to whether it will raise them.

After the Federal Reserve maintained the interest rate at 3.50%-3.75% on March 18, market expectations for an interest rate hike surged. Bloomberg data shows that the probability of a rate increase in October exceeds 60%, and CME FedWatch estimates the probability of a rate increase by the end of the year is close to 40%, while the probability of a rate cut in April has dropped to 0%.

The core driving force behind the return of interest rate hike expectations is oil prices. The escalation of the situation in the Middle East has raised concerns about supply disruptions in the Strait of Hormuz, with Brent crude oil breaking above $109 per barrel on March 20, and U.S. crude hitting $98 per barrel. The EIA's earlier prediction of oil prices dropping below $80 in the third quarter was deemed overly optimistic by the market, and it directly revised the interest rate expectations.

The macro market subsequently experienced sharp fluctuations, with the yield on 10-year U.S. Treasuries rising to 4.37%, the 30-year yield reaching a new high since September, and the S&P 500 declining for four consecutive weeks.

Global stock funds shrank by $20.3 billion in a single week, while money market funds attracted $32.57 billion, with nearly 4% cash yield continuously withdrawing funds from risk assets.

Bitcoin also was not spared, dropping below $70,000 on March 20, moving in tandem with QQQ and gold.

Geopolitical conflicts were supposed to support demand for hard assets as a safe haven; however, the Fed's hawkish reassessment led to rising yields and a stronger dollar, which not only suppressed gold but also rendered Bitcoin's inflation hedging logic completely ineffective.

The current macro environment of moderate inflation and no recession is most unfavorable for Bitcoin. On one hand, inflation driven by oil prices forces the Federal Reserve to maintain tightening rather than relaxing policies; on the other hand, institutional capital entry has increased Bitcoin's correlation with the stock market, leading to Bitcoin's decline following the sell-off of growth assets.

At the funding level, after a net inflow of $199.94 million into U.S. spot Bitcoin ETFs on March 17, there was a net outflow of $253.7 million over the next two days, clearly indicating a shift in funds.

The future trend of Bitcoin depends on two major macro pathways. In a bullish scenario, if oil prices rapidly decline, April employment data shows weakness, and PCE data does not indicate a secondary inflation shock, interest rate hike expectations will quickly cool off, and Bitcoin will regain liquidity support, with Citibank providing a benchmark target price of $112,000 and a bullish target price of $165,000.

In a bearish scenario, if oil prices remain between $80-$100 in the summer and core PCE growth exceeds 3.2%, bets on rate hikes will become the norm, and Bitcoin may fall to $58,000.

On a global level, the European Central Bank and the Bank of England also face expectations of interest rate hikes, and disruptions in energy supply are constraining the easing capacity of global central banks. Although long-term inflation expectations remain controllable, short-term policy tightening has become mainstream.

Currently, Bitcoin is facing a crucial test. Its core pricing attributes remain an inflation hedge or a barometer of global liquidity; the answer will ultimately be revealed by the employment, PCE data, and FOMC meeting in April.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。