HTX DeepThink: In addition to policy interest rates, long-term yields are becoming a key constraint on Crypto valuations

Comparing news, HTX DeepThink columnist and HTX Research researcher Chloe's analysis pointed out that the current core conflict in the macro market has shifted from “when will the Fed cut interest rates” to “whether the Fed needs to raise interest rates again.” Warsh tried to reduce the impact of monthly data on policy, but since its policy framework was not fully understood by the market, the July and August inflation data instead became a key variable in determining policy expectations for September. If the core CPI remains at or below 0.2%, the market will re-trade, inflation will fall back and policy will be suspended; if it continues to be higher than expected, the Federal Reserve will face a “rate hike or loss of credibility”.

As far as risk assets are concerned, we really need to pay attention not only to federal funds interest rates, but to long-term US bond yields. The “short-term decline and long-term rise” that appeared after the July meeting meant that the market began to take into account the higher risk of long-term inflation and the Federal Reserve's credit premium. If 30-year US Treasury yields continue to rise, financial conditions will naturally tighten even if the Federal Reserve remains on hold, and highly valued, liquidity-dependent technology stocks and Crypto will all be suppressed.

For Crypto, the coming month is more likely to be volatile than a one-sided market. If the CPI is moderate, US bond yields fall, and the dollar weakens, BTC may take the lead in benefiting and driving high-beta altcoins to rebound; if inflation accelerates again, the market will reprice the probability of interest rate hikes in September, long-term interest rates may break through again, and Crypto is prone to deleveraging and rapid decline.

Therefore, what is currently worth paying more attention to is not betting on “interest rate hikes or not,” but rather the evolution of the three sets of signals: whether core CPI and PCE have rebounded continuously, whether 30-year US Treasury yields have broken through previous highs, and whether BTC can maintain its relative strength under the macroeconomic downturn. If inflation is high and BTC does not fall, it indicates that Crypto's internal capital is forming an independent trend; conversely, if BTC falls below key support while yields rise, we need to be wary of the possibility of a new round of liquidity contraction.

Note: The content of this article is not an investment opinion, nor does it constitute an offer, solicitation of offers or suggestions for any investment products.