Federal Reserve Shifts from Hawkish to Dovish, Potential Policy Adjustment in September
Although Federal Reserve Chairman Powell's stance was relatively hawkish at the FOMC meeting on June 18, 2025, the overall Fed messaging has significantly turned more moderate. After the June meeting, President Trump publicly criticized the Fed's policy stance, with multiple Fed officials releasing dovish signals in public statements, and Powell himself adopting a more conciliatory tone during this week's congressional testimony.
Currently, the reasons for maintaining interest rates unchanged are becoming increasingly difficult to justify, with inflation having fallen to 2.38%, not far from the 2.0% target. Last Friday, Fed Governor Waller first suggested that the July FOMC meeting might consider a rate cut; subsequently on Monday, Governor Bowman expressed a similar view. Chicago Fed President Goolsbee further downplayed the inflationary impact of tariffs, reinforcing market expectations of the Fed's shift to a dovish stance.
Although Powell and several economists previously warned that tariffs could cause inflation to surge above 3%, this scenario has not occurred. Current inflation remains stable, and unemployment has maintained around 4.2% for nearly a year, contrary to initial market expectations of weakening employment. Powell has not refuted his recent more dovish comments. He stated that if inflation remains moderate, rate cuts might be brought forward. While the likelihood of a July rate cut remains low, the Fed may signal potential policy adjustments at the September 30 meeting.
Corporate Credit Spreads Narrow Again Compared to Last Year, BTC Performance May Continue to Improve
Earlier this week, BTC briefly retraced to near its 21-week moving average ($98,532) due to US military airstrikes against Iran. This level is both a key technical support and often viewed as a trend demarcation line. BTC currently remains in seasonal oscillation, and the Fed's dovish tone may provide moderate upward support for prices.
Corporate credit spreads have again shown signs of narrowing compared to the same period last year—a signal historically considered bullish. Narrowing credit spreads typically reflect improving economic fundamentals, and in such an environment, macroeconomic performance and BTC often move positively in sync. This dynamic also suggests that while current data is insufficient to prompt immediate Fed action, political pressure might still drive policy stance adjustments.
Stablecoin Inflow Increases Simultaneously with Market Liquidity Shortage, BTC Dominates Market Focus
Stablecoin inflows, especially Tether, have recently begun to rise. Although the overall trend remains unstable, Tether's minting scale has reached approximately $12 million since April, while Circle's minting activity remains relatively limited. This divergence is noteworthy, as crypto market sustained rallies have historically depended on robust stablecoin and broader liquidity channel injections. When comparing stablecoin issuance with overall crypto market capitalization, liquidity issues become more critical. In the absence of massive fund inflows, traders will likely continue focusing on BTC, which continues to significantly outperform other crypto assets.
Disclaimer: Markets involve risks, and investments require caution. This article does not constitute investment advice. Digital asset trading may involve extreme risks and volatility. Investment decisions should be made after carefully considering personal circumstances and consulting financial professionals. Matrixport is not responsible for any investment decisions based on the information provided herein.
