Ultimatum! The Federal Reserve's interest rate cut script may be rewritten tonight, is the "$BTC macro shelter" collapsing?

Geopolitical conflicts and inflation rebound, like two pliers squeezing the market’s throat. Expectations of Federal Reserve rate cuts are swinging wildly. The core contradiction lies in whether high energy prices will ultimately evolve into persistent inflation or erode consumer demand, thereby forcing the Fed to cut rates?

Market analysis points out that a major investment bank has provided a clear reason for a bullish outlook on rate cuts. The logical chain is straightforward: tensions in the Strait of Hormuz impacting oil supply are more likely to be temporary. Treasury yields and oil prices have retreated from their highs, and the market seems to be pricing in a “short-lived shock.” Therefore, the path to lower interest rates and a dovish Fed still exists.

The microdata tracked by this bank also supports this judgment: the Fed’s reverse repurchase agreement scale has fallen close to zero; financial conditions are tightening; labor market indicators are flat; personal tax refunds are slightly higher than the same period last year. These details form the underlying support for their optimistic outlook.

Tonight’s release of March retail sales data will be a key test. Due to rising gasoline prices, a surge in nominal retail sales is inevitable. But the real focus is on the “control group” sales data excluding categories like gas stations. If it unexpectedly weakens, it will prove that high oil prices are materially damaging consumption in other areas, providing data support for rate cuts.

However, another top European investment bank pours cold water on this view. Their perspective is entirely opposite: the Fed may maintain current rates indefinitely because policy is already in a neutral position.

Their pessimism is based on three points: the process of fighting inflation has stalled; statements from Fed officials have taken on a more hawkish tone. For example, Waller pointed out that long-term conflicts will hinder rate cuts, and the shocks could trigger more persistent inflation; Williams believes policy is “just in the right position”; Harker explicitly stated that rates will “remain unchanged for quite some time.”

Their hawk-dove scoring of officials shows that the average voting committee score in 2026 is 2.8, overall neutral leaning slightly dovish, but dovish members are in the minority. Market pricing has also undergone a fundamental reversal: currently, the expectation is for “zero rate cuts in 2026,” with the first cut not until summer 2027. Their baseline scenario predicts the federal funds rate will stay at 3.63% throughout 2026 to 2028.

For the crypto market, especially $BTC and $ETH, this debate over the rate path is crucial. A long-term high-interest rate environment will continue to suppress risk asset valuations and weaken their narratives as “inflation hedges” and “tech growth assets.”

In this macroeconomic uncertainty, it is especially important to seek out niche sectors with solid fundamentals. For example, DePIN projects that combine AI and storage narratives, offering decentralized physical infrastructure networks, could become the key underlying layer for next-generation internet applications.

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