Beyond Policy Rates, Long-Term Yields Are Becoming a Key Constraint on Crypto Valuation

On August 11, columnist and researcher Chloe analyzed that the core contradiction in the current macro market has shifted from "when will the Federal Reserve cut interest rates" to "does the Federal Reserve need to raise rates again?" Warsh attempted to reduce the impact of single-month data on policy, but since its policy framework has not been fully understood by the market, the inflation data from July and August have instead become key variables determining the policy expectations for September. If core CPI remains at 0.2% or below, the market will re-trade the decline in inflation and the pause in policy; if it continues to exceed expectations, the Federal Reserve will face a choice between "raising rates or losing credibility."

For risk assets, what truly needs attention is not just the federal funds rate, but the long-term U.S. Treasury yields. The "short end down, long end up" phenomenon that emerged after the July meeting indicates that the market is beginning to price in higher long-term inflation risks and a credibility premium for the Federal Reserve. If the 30-year U.S. Treasury yield continues to rise, even if the Federal Reserve remains inactive, financial conditions will naturally tighten, putting pressure on high-valuation, liquidity-dependent tech stocks and Crypto.

For Crypto, the next month is more likely to be characterized by high volatility rather than a one-sided trend. If CPI is moderate, U.S. Treasury yields decline, and the dollar weakens, BTC may benefit first and lead to a rebound in high Beta altcoins; if inflation accelerates again, the market will reprice the probability of a rate hike in September, and long-term rates may break through again, making Crypto susceptible to deleveraging and rapid declines.

Therefore, what is more worth paying attention to now is not the premature bet on "whether to raise rates or not," but the evolution of three sets of signals: whether core CPI and PCE rebound consecutively, whether the 30-year U.S. Treasury yield breaks previous highs, and whether BTC can maintain relative strength under macroeconomic headwinds. If inflation remains high while BTC does not fall, it indicates that internal funds in Crypto are forming an independent trend; conversely, if yields rise while BTC breaks critical support, caution should be exercised regarding the possibility of a new round of liquidity contraction.

Note: The content of this article does not constitute investment advice and does not constitute any offer, solicitation, or recommendation of investment products.

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.