Recently, every move by the Federal Reserve has become a "political weather vane." The Fed just cut the benchmark interest rate by 25 basis points, initially intending to show a dovish stance, but instead it was interpreted by the market as a hawkish signal—because the dot plot shows almost no rate cuts planned after 2026. As a result, Treasury yields shot up and are now firmly around 4.2%.

The real "bomb" is Trump's strong stance. He angrily criticized Powell for setting interest rates too high, even bringing up the $2.5 billion overspending on the Fed building renovation project. This seems like an attack on the Fed's efficiency, but in fact, it’s exerting pressure on Powell to cut rates significantly. There’s an implied message: if there’s no cooperation, the next chairperson will be someone else.

Powell has about five months left in his term, and the pressure he faces is evident. Such political interference in the Fed’s independence has alerted the market to risks. If the Fed is truly forced to change its policy direction, long-term Treasury yields could continue to rise, and inflation expectations will also increase. Some strategists even speculate that under this political pressure, yields breaking through 4.5% is not a pipe dream.

For the cryptocurrency market, this is a background worth paying attention to. The high levels of U.S. Treasury yields mean that the attractiveness of risk assets is relatively declining, and investors tend to prefer safer sources of return. However, once expectations shift, market reactions can be swift.

The current situation is somewhat ironic: the Fed tries to stabilize the market through policy adjustments, but instead it increases uncertainty. When Powell leaves office in May 2026, will the Treasury market breathe a sigh of relief or become even more anxious? It probably depends on how the Trump administration ultimately plays its hand.