Powell's tone softens, rate cut countdown begins

Federal Reserve Chair Jerome Powell, in his latest speech, broke away from his previous cautious language, clearly stating that "inflation is sustainably moving toward the 2% target," and said that "the timing for policy adjustments is getting closer." The market widely interprets this as a clear prelude to a rate cut in June. The CME FedWatch tool shows that the probability of a 25 basis point rate cut in June surged to 72% after the speech, the US dollar index fell below 104, and Treasury yields declined across the board.

For Bitcoin, this is the most critical macro turning point in months. As a typical liquidity-sensitive asset, Bitcoin has been under continuous pressure from the "higher for longer" interest rate expectations over the past six months. Powell's dovish shift is akin to lifting the heaviest chains on risk assets. Within an hour after the speech, Bitcoin surged from around $67,000 to over $68,500, with market sentiment quickly shifting from "fear" to the edge of "greed."

Even more noteworthy is that this dovish signal is not an isolated event. Previously, easing Middle East geopolitical tensions and Trump’s renewed hints of a "weak dollar" had already created a relatively warm macro environment for risk assets. Powell’s statement is like the final piece of the puzzle—markets are beginning to price in the true arrival of a "liquidity turning point." Signs of institutional funds flowing into digital assets are evident, with Coinbase’s premium turning positive again, indicating that overseas traditional capital is re-entering the market.

Of course, the market’s optimism still needs to be tested by subsequent inflation data. But at present, the rate cut expectations ignited by Powell have become the strongest catalyst for Bitcoin to challenge the psychological barrier of $70,000. For investors who have endured a long bear market, this macro shift in spring finally brings the long-awaited certainty.