Recently, Federal Reserve Chairman Powell released new policy signals, attracting widespread attention from the market. He clearly stated that interest rates will continue to be lowered and the balance sheet reduction will be paused, which means that liquidity may be increased again.

With the news breaking, we observed significant changes in the financial markets: gold prices surged, U.S. Treasury yields fell, and the stock market rebounded from its decline. These changes indicate that market sentiment is improving. However, behind these surface phenomena, there are actually some concerning issues that warrant caution.

First, Powell's move may signal a resurgence of liquidity issues. The current situation is quite similar to the 'repo crisis' of 2019. SOFR (Secured Overnight Financing Rate) has sharply increased again, the size of the repo market has shrunk, and bank reserves are nearing dangerous levels. These signs indicate that if monetary policy continues to tighten, the market may face the risk of a funding shortfall.

Secondly, the latest economic data shows that the US GDP has been revised downwards, and the manufacturing PMI continues to decline, indicating that the real economy has begun to be affected. In this situation, the Federal Reserve has to adjust its policy direction to avoid greater shocks to risk assets.

For the cryptocurrency market, this is undoubtedly a positive message in the short term. A loose monetary policy may reduce the cost of funds and increase market liquidity, while also potentially stimulating investors' demand for safe-haven assets, thereby driving up the prices of cryptocurrencies like Bitcoin.

However, investors should remain cautious. While market sentiment may improve as a result, we should not overlook the potential economic risks. The shift in policy is more a result of necessity rather than a true signal of an improving economic situation.

Overall, while Powell's policy shift may boost market confidence in the short term, investors still need to closely monitor changes in the economic fundamentals and carefully assess the investment opportunities and risks of various assets.