The Federal Reserve's policy shift may present new opportunities for the digital currency market.

On March 19, at the monetary policy meeting of the U.S. Federal Reserve, a series of important decisions signaled a "gentle" approach, which had widespread effects on the global financial markets, including the digital currency market that also embraced new development opportunities.

The Federal Reserve has slowed the pace of balance sheet reduction since April 1, while the cap on Treasury bond holdings has been significantly reduced, while keeping the cap on MBS holdings unchanged. This action aims to stabilize liquidity in the market, creating space for future monetary policy adjustments. Additionally, the projected dot plot for the possibility of two interest rate cuts this year has made market liquidity expectations even more widespread.

For the digital currency market, on the one hand, as funds from the traditional financial market seek new investment directions, digital currency as an emerging investment field, with its high profit potential and unique technical characteristics, can attract a portion of capital flows from traditional financial markets. Bitcoin's characteristics, for example, such as fixed total supply and decentralization, make it the new choice for investor asset allocation during periods of abundant market liquidity. On the other hand, investment sentiment in the market, driven by the policy shift of the US Federal Reserve, became more positive. Investor acceptance of risky assets increases, the activity of the digital currency market is expected to be further strengthened, the trading scale may continue to expand.

Powell mentioned that tariffs drive inflation expectations, although the degree of inflation impact is difficult to determine, currently long-term inflation expectations are stable, and the Federal Reserve will flexibly adjust its policy based on economic data. This provides a relatively stable macroeconomic environment for the development of Digital Currency, minimizing the uncertainty risks due to large fluctuations in the macroeconomy.

Overall, the policy adjustments by the U.S. Federal Reserve have brought dual benefits to the digital currency market, including new capital inflows and enhanced market confidence. However, it is important to note that the digital currency market is characterized by high volatility and significant risks, so while seizing opportunities, investors should also fully assess the risks, invest rationally, and closely monitor market developments as well as policy changes to make steady progress in the new market environment.