Bitunix Analyst: What the market is truly starting to worry about is no longer whether interest rates will be cut or not, but whether the Federal Reserve will re-accept the "long-term high interest rates."

BlockBeats News, April 29 — The market has almost fully priced in the Federal Reserve holding interest rates steady, and the real focus is shifting to another issue — whether the Fed is reaccepting the possibility of rate hikes. This is also why, recently, the long-term U.S. Treasury yields are approaching 5% again, and the market is betting heavily on a decline in long-term bonds.

Over the past two years, the Federal Reserve has consistently viewed energy, tariffs, and supply chain shocks as “one-time inflation,” so even with oil price fluctuations, the market still believes it can eventually return to a rate-cutting cycle. But now, the Middle East conflict has entered its third month, with Brent crude oil prices rising about 50% since the outbreak of the conflict, and the Fed is beginning to publicly question for the first time: if one-time shocks keep recurring, can they still be considered one-time?

This is the real risk tonight. The market’s concern is not whether the Fed will immediately raise interest rates, but whether Powell will officially admit — that high oil prices and supply chain issues may be re-penetrating core inflation. Because once the Fed accepts this logic, it means that “maintaining high interest rates for longer” will once again become the main market theme.

More importantly, this meeting could also be Powell’s last time presiding over the FOMC as Chair. Kevin Warsh, nominated by Trump, is close to completing the confirmation process, and Warsh himself is a typical hawkish figure. If Powell ultimately resigns from his board seat as well, Trump will have the first real chance to reshape the Federal Reserve’s power structure.

Therefore, what the market is actually trading now is not whether rates will be cut tonight, but how the “next Fed” will redefine inflation and interest rates. This is also the core reason why the USD, U.S. Treasury yields, and gold have recently maintained high volatility in sync.

For the crypto market, BTC is still benefiting from risk asset capital inflows and ETF demand, but if the Fed begins signaling “rate hikes are not ruled out,” high-valued tech stocks and the crypto market could face liquidity pressures again. In the short term, what truly needs to be observed is no longer the interest rate itself, but whether Powell is willing to reopen the door for the market to expect rate hikes.