Bitunix Analyst: From Forward Guidance to Policy Fog, the “Wosh Era” Officially Kicks Off a Global Volatility Revaluation

BlockBeats message, June 22 — The core focus of global markets has gradually shifted from the Middle East conflict itself to a reassessment of monetary policy and liquidity. Although the talks between the US and Iran held in Switzerland achieved some phased progress—both sides agreed to set up a high-level political oversight committee and to draw up a 60-day final agreement roadmap— the Strait of Hormuz has still not fully returned to normal operations. There remain clear differences between Iran and the US on the Lebanon issue and oil sanctions exemption matters, and geopolitical risks have not yet been fully eliminated.

Meanwhile, energy markets are beginning to reflect expectations of supply restoration. Libyan crude oil output has risen to a new high since 2013. Iraq plans to gradually restore production capacity to pre-conflict levels, and Qatar has also started preparations to restart LNG exports. Markets are reassessing the impact that the restoration of Middle Eastern supply chains will have on global energy prices and the inflation path, as the supply shocks brought about by the war are gradually being replaced by supply normalization.

However, it is the shift in Federal Reserve policy that is truly driving market pricing. The interest-rate market has now fully priced in expectations of a 25 basis point rate hike in September. Goldman Sachs has simultaneously lowered its target price for gold and expects no rate cuts within the year. The newly appointed Fed Chair, Waller, continues to push for weakening forward guidance and the dot-plot mechanism, significantly increasing market uncertainty about the policy path. From the continued rise in US Treasury yields, to the US dollar index staying strong, to the start of large-scale unwinding of global arbitrage trades, all of this indicates that capital is flowing back into the dollar system.

At the same time, after the Bank of Japan raised interest rates, while the Japanese government has stated its support for policy normalization, markets have begun to focus on the room for further rate hikes and the risks of yen intervention. Japan’s Ministry of Finance has publicly warned that it will take action against foreign exchange speculation, reflecting that major global central banks are gradually moving into a more tightening policy environment.

For the crypto market, the biggest variable is no longer the Middle East situation, but rather the liquidity pressure arising from continuously rising global funding costs. While the decline in energy-related risks helps ease inflation concerns, a stronger dollar, rising US bond yields, and growing expectations of Fed rate hikes will continue to weigh on the valuation of risk assets. When the market begins to price “longer-lasting high interest rates,” or even “another rate hike,” the key for the crypto market shifts from geopolitical events to whether liquidity will see new incremental sources.