Trump puts pressure on the Federal Reserve: Can monetary policy "extend life" for the crypto market?

Author: Bright, Foresight News

On March 19, US time, the US Federal Reserve ended its two-day monetary policy meeting and announced that it would maintain the target range of the federal funds rate between 4.25% and 4.50%, in line with market expectations.

The cryptocurrency market rose in response, and Bitcoin's four-hour line level went out of "nine consecutive positives", with the highest point reaching $87,453.67. Ethereum strongly broke through the shock range, breaking through the $2,000 mark, and the highest point reached $2,069.90. Market liquidity expectations have improved relatively.

As of 13:00 on March 20, the entire network had a liquidation of $355 million in the past 24 hours, $257 million in short orders, and $97.7425 million in long orders, mainly short orders. It is worth noting that before the Federal Reserve FOMC meeting, Ethereum's upward breakthrough once caused the amount of Ethereum's liquidation to exceed Bitcoin.

Powell: The Federal Reserve needs "technical adjustments"

The Federal Reserve did not move as expected, but it released a lot of dovish signals. Federal Reserve Chairman Powell mentioned "uncertainty" 16 times in an hour in his speech at the White House press conference, repeatedly emphasizing the uncertainty of the US economic outlook.

Compared with the interest rate meeting in January, the Fed deleted the statement that "the risks to achieving employment and inflation goals are roughly balanced" in its statement, and raised the core PCE inflation forecast for 2025 to 2.8%. This adjustment may imply that the Fed's confidence in a soft landing of the economy has weakened, and global markets have begun to bet on future interest rate cuts.

At the same time, since April, the monthly reduction limit of U.S. Treasury bonds has dropped sharply from US$25 billion to US$5 billion, and the reduction limit of MBS has remained at US$35 billion. Although Powell called this move a "technical adjustment", the market interpreted the Fed's move to significantly slow down the pace of balance sheet reduction as the end of quantitative tightening (QT). For a time, U.S. Treasury yields fell 8-11 basis points, gold broke through $3,050/ounce to hit a record high, and the Nasdaq and Dow Jones Industrial Average rose.

Trump: Cut interest rates immediately!

Trump posted on Truth Social after the FOMC meeting: "As US tariffs begin to transition to the economy (easing!), the Fed is better off cutting interest rates. April 2 is American Liberation Day!!"

Trump strongly demanded that the Fed "cut interest rates immediately" and accused the high interest rate policy of being a continuation of "Biden inflation." Last month, Trump posted on Truth Social that "interest rates should be lowered, which will go hand in hand with the upcoming tariffs!!" It can be seen that its core logic is: interest rate cuts can reduce the government's debt costs of up to 36 trillion, while cooperating with tariff policies to promote the return of manufacturing.

Earlier, Trump's national economic adviser Hassett publicly stated that the White House predicts an economic growth rate of 2.5% in 2025, far higher than the Fed's latest forecast of 1.7%. The divergence stems from Trump's optimism about tariff policy - he believes that protectionist measures can "revitalize manufacturing", but economists warn that it may trigger a global trade war and push US inflation to more than 2.5%. Fitch Ratings pointed out that Trump's tariffs and the "huge uncertainty" surrounding tariffs are two driving factors behind the potential economic slowdown and short-term price increases. This uncertainty is likely to freeze any interest rate cuts by the Federal Reserve, leading to a wider divergence between Trump and the Federal Reserve.

Crypto season change: slow recovery

In the native crypto market, the recent favorable news at the regulatory level has led to the first recovery of some currencies, which may further promote the warming of the market under the premise of macroeconomic relaxation.

On March 12, the direct positive stimulus of Abu Dhabi's sovereign fund's investment of $2 billion in Binance led to BNB and the BSC ecosystem taking the lead in carrying the banner of recovery on the crypto chain, and gave birth to phenomenal BSC Meme market such as MUBARAK, whose market value exceeded $200 million. On March 19, according to DeFiLlama data, the BSC ecosystem DEX's trading volume in the past 24 hours reached $2.664 billion, surpassing Ethereum's $1.356 billion and ranking first.

On the evening of March 19, the positive news that "the US SEC will give up the appeal against Ripple" directly stimulated XRP to rise by 11.46% in a short period of time, with the highest point reaching $2.59. On March 20, Ripple CEO Brad Garlinghouse revealed in an interview with Bloomberg that the XRP ETF is expected to be listed by the end of 2025. And said that Ripple Labs' IPO is not impossible.

For the future market, BitMEX co-founder Arthur Hayes tweeted on X, "Powell has fulfilled his promise, and quantitative tightening (QT) basically ended on April 1. Next, if we really want to push the market into a bull market, we must either restore the supplementary leverage ratio (SLR) exemption policy or restart quantitative easing (QE). $77,000 may be the bottom of Bitcoin, but the stock market may have to go through another shock before Jay (Powell) can completely turn to the Trump team."

Wall Street traders have already begun betting on rate cuts in June and July. But in the short term, those who are still in the crypto market must remain flexible, after all, the "Sword of Damocles" of tariffs that took effect on April 2 is still hanging high. Perhaps it's time to, as Arthur Hayes said, "keep cash on hand."