The U.S. economy is a bit awkward right now—inflation continues to rise, but the unemployment rate is also climbing. With this combination, everyday life is tough for ordinary people: prices go up, wallets shrink; businesses face higher costs but struggle to hire. The economy is like a tightened spring, ready to snap at any moment.

The Federal Reserve is now at a crossroads. They claim to be "cautiously optimistic," but it's more like "unsure of the direction but still moving forward." If inflation can't be contained, people will complain; if unemployment keeps rising, businesses will suffer. So, the likely next move is to respond to data—slow down when data looks good, tighten when data looks bad. But the question is, should they raise or cut interest rates? This double-edged sword could hurt either side depending on how it's wielded.

In the crypto world? That’s the most sensitive player in this game.

First, talk about liquidity. If the Fed really raises interest rates and tightens liquidity, hot money will immediately flock to "safe havens"—government bonds, gold, blue-chip stocks—these traditional safe assets will become more attractive again. Crypto assets, with their high volatility? Sorry, risk appetite drops, funds exit faster than anyone. Without new capital entering the market, crypto prices naturally can’t hold up.

Next, sentiment transmission. Inflation combined with an uncertain economic outlook will lead the market into a "prefer to miss out than risk making a mistake" state. Investors start calculating: rather than betting on crypto doubling, it’s safer to hold a 5% risk-free return and relax. During such times, trading volume in crypto shrinks noticeably, and price swings become even more intense—liquidity dries up, and a few large orders can push the market into a hole.

There’s also a hidden mechanism: the US dollar index. Every shift in the Fed’s policy influences the strength of the dollar. Rate cuts? The dollar weakens, and cryptocurrencies tend to rise (since many coins are dollar-denominated, a weaker dollar effectively boosts their prices). Rate hikes? Conversely, a strong dollar suppresses crypto prices. While not 100% precise, this relationship generally holds true.

So, the current situation is: every move by the Fed could become a "roller coaster switch" for crypto. Inflation data, employment reports, Fed meeting minutes—each announcement causes the market to twitch.

For those still navigating the crypto scene, it’s best not to just watch candlesticks. Look more at macro data, think about where funds might flow, and don’t wait for the Fed to make a statement before quickly adjusting your positions. After all, nowadays, crypto’s ups and downs are not just about technicals—when Wall Street sneezes, you might catch a cold.