Ultimatum! Powell hits the pause button on rate hikes—how long can $BTC's 71,000 defense line hold under the shadow of war?

At dawn, the Federal Reserve’s interest rate decision was announced, maintaining the current stance. However, the market sensed not dovish reassurance but hawkish sharpness. While policymakers still expect a rate cut this year, the magnitude has shrunk to 16 basis points. This is like a cold shower, dousing some of the bulls’ hopes.

Market analysis indicates that, according to Polymarket data, traders are re-pricing. The probability of interest rates remaining unchanged this year has risen to 27%, the chance of only one rate cut is 33%, and the probability of two cuts has fallen to 20%. The sentiment is subtly shifting.

Powell’s speech provided context for this cautious stance. He clearly stated that, until inflation shows further improvement, rate cuts are not under consideration. More importantly, he revealed a signal previously overlooked by the market: the committee has begun discussing whether a rate hike might be next. Although he emphasized this is not a baseline assumption, the re-emergence of the “rate hike” term alone is enough to make risk assets tremble.

Persistent inflation is evident. February’s Producer Price Index far exceeded expectations, with tariff pressures continuing to feed into core inflation. Meanwhile, tensions in the Middle East are pushing Brent crude oil prices toward $107 per barrel. The energy shock not only directly raises prices but may also suppress consumption and squeeze corporate profits, creating a chain reaction that could impact employment and economic activity.

Corpay’s Chief Market Strategist, Carl Shamota, believes the Fed is adopting a “wait-and-see” approach. Meanwhile, Chintan Shah, CIO of Savvy Wealth, warns that sustained high oil prices could create a dangerous combination of “high inflation and slowing growth,” making it even more difficult for the Fed to balance price stability and employment.

The crypto market responded immediately. Bitcoin ($BTC), after achieving a rare eight consecutive daily gains and reaching $76,000, has pulled back to the $71,000 range, with a low of $70,500. Ethereum ($ETH) also retreated from around $2,400 to $2,200. Altcoins generally declined. Over the past 24 hours, the total liquidation amount across the network reached $458 million, with longs accounting for $385 million.

Traditional markets are also suffering. The Dow Jones fell 1.63%, hitting a new low for the year; Nasdaq and S&P 500 declined 1.46% and 1.36%, respectively. The Dow has dropped over 5% this month, possibly marking its worst monthly performance since 2022.

Regarding the uncertainty surrounding Fed Chair Powell’s future, he provided a clear response. He stated he will not leave during his ongoing legal investigation and will serve as “acting chair” if necessary until a successor is confirmed. Currently, the market assigns only a 2% probability of his departure in May. The stability of leadership temporarily removes one source of uncertainty.

So, how will the crypto market evolve next? Some analysts believe the early bear market selling pressure may have passed, but more confirmation signals are needed. The current market structure appears more optimistic than in previous months, with $BTC seemingly supported by solid institutional buying at the $60,000 level.

Key levels for $BTC include breaking through $74,000 and $80,000 resistance. From a cycle perspective, historical peak-to-trough corrections typically take around 400 days, while this correction has lasted less than 200 days so far. Due to structural factors like stablecoin adoption and improved institutional infrastructure, the bottom of this bear market may be relatively shallow, but the speed of recovery should not be overly optimistic.

On-chain data offers another perspective. When $BTC briefly broke above $74,000, short-term holders’ profits surged to $18.4 million per hour. This pattern aligns with February’s observations: short-term holders continued to absorb buying momentum near the $70,000 mark, depleting much of the buying power before a true breakout was formed.

Currently, $71,000 acts as a barrier between bulls and bears. On the upside are shrinking rate cut expectations, energy inflation threats, and short-term profit-taking pressures; on the downside, potential support from institutional cost zones. The market is waiting for the next variable to break the balance.

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