At around 3 am Beijing time on March 20, the Federal Reserve will announce its latest interest rate decision, and then Chairman Powell will hold a press conference, with the global market holding its breath.

The financial market is facing many uncertainties. The special feature of this meeting is that it will comprehensively evaluate the impact of a series of new policies of the Trump administration on the US economy, and the policymakers of the Federal Reserve will discuss the progress of inflation control and decide whether to adjust monetary policy.

The market has been under pressure in advance, and Bitcoin has consolidated and fallen back

The optimistic sentiment only lasted a few days, and the risk market fell back again before the Federal Reserve meeting. As of the time of writing, the price of Bitcoin is around $82,715, down 1.5% in the past 24 hours.

Major currencies such as Solana, Ethereum and XRP have seen more significant declines. The US stock market is also under pressure, with the Nasdaq index and the S&P 500 index both declining. Market concerns about the Federal Reserve not immediately easing policy are intensifying, although inflation data in February has slowed, the magnitude is not significant, and it is only a single-month data.

The Federal Reserve is likely to remain unchanged, but the 'dot plot' hides mysteries

The market generally expects that the Federal Reserve will maintain the current federal funds rate target range of 4.25%-4.50% unchanged this time. According to the CME Group's FedWatch tool, traders believe the possibility of a rate cut in March is negligible.

Previously, Federal Reserve officials have repeatedly emphasized that they will adopt a "wait-and-see" attitude, partly because President Trump's economic policies have brought significant uncertainty, which has already begun to affect business and consumer confidence, and has triggered stock market declines and concerns about economic recession.

The focus of this meeting will be the 'Summary of Economic Projections' released along with the policy announcement, especially the closely watched 'dot plot'. This chart will show the median forecast of the 19 committee members on future federal funds rates, which is an important basis for the market to speculate on the future interest rate path.

Although Nomura Securities analysts expect that the median forecast in the 'dot plot' this time will not change much, considering the tense market sentiment and the uncertainty about future rate cut expectations, any slight adjustment may trigger violent market fluctuations.

Under Trump's 'policy fog': Stagflation casts a shadow, Wall Street sounds the alarm

Recent economic data and market sentiment indicate that analysts are beginning to worry about the risk of 'stagflation', which means that if bad news emerges in the future, US stocks may also fall.

In simple terms, everyone is worried that Trump's policies may slow economic growth, while prices are still rising, which is 'stagflation'. Wall Street institutions have already started to worry about this and adjust their expectations.

Many institutions, including JPMorgan Chase, Goldman Sachs and Morgan Stanley, have recently lowered their economic growth forecasts for the US, mainly because they believe that the Trump administration's restrictive trade and immigration policies may have an adverse impact on the economy.

Looking at inflation, although the price index in February showed a slowdown in inflation, Goldman Sachs' economists pointed out that considering that the Trump administration has already started to impose tariffs, and may further increase them in the future, the Federal Reserve may have to re-evaluate their inflation forecasts. Goldman Sachs even predicted that in the Federal Reserve's 2025 economic forecast, the core inflation rate may be revised upward to 2.8%, while the GDP growth rate may be revised downward to 1.8%, mainly due to the impact of tariff policies.

How is the Federal Reserve expected to affect the nerves of the cryptocurrency market?

Cryptocurrencies such as Bitcoin are often seen as 'risk assets', and their price trends are closely related to investors' risk appetite. In a high-interest rate environment, relatively safe assets such as bonds become more attractive, which may lead to capital outflows from high-risk assets such as cryptocurrencies. Currently, the Bitcoin price is hovering around $83,000, and the market sentiment index is still in the 'fear' range, which may mean that the market has already anticipated potential negative news.

According to Polymarket participants' forecasts, economic uncertainty and global tensions could exacerbate the bearish pressure on the cryptocurrency market. Polymarket data shows that the probability of Bitcoin's closing price this week being between $81,000 and $87,000 is 51%.

Summary

The Federal Reserve's policy announcement and Powell's speech will undoubtedly set the tone for the short-term direction of the cryptocurrency market. A dovish signal may ignite hopes of a market rebound, while a hawkish stance may prolong the current downtrend. In a market where sentiment is already quite pessimistic, any slightly positive signal could become a catalyst for price increases. However, for cryptocurrency investors, maintaining vigilance and caution remains the best strategy to cope with market volatility.