Economic Slowdown or Pressures Fed to Turn Dovish, Policy Pivot Still Constrained by Inflation Risk

BlockBeats News, March 11th. According to TheBlock, analysts pointed out that last Friday's weaker-than-expected U.S. February employment report reinforced the market's expectations of a Fed rate cut, which could boost risk appetite and lift both the stock market and crypto assets. However, the ongoing inflation risks from tariffs and supply chain disruptions continue to constrain policy shifts. Seasonal adjustment data from the U.S. Department of Labor last week showed that non-farm payrolls only added 151,000 jobs from January to February, marking the weakest February growth since 2019 and below the Dow Jones survey economist's expectation of 170,000. Government layoffs, federal funding cuts, tariff uncertainty, and tightened immigration policies will drag on future job growth in the coming months. These factors could lead to a slowdown in hiring, dampen economic momentum, and reinforce deflationary trends. The Fed is facing a complex policy environment: weak employment supports a rate cut, but supply-side constraints and inflation concerns from geopolitical risks make the Fed cautious. Uncertainty may continue to suppress the crypto market.

Paul Howard, Senior Director at Wincent, stated that the weaker-than-expected employment report underscores the need for rate cuts to stimulate the economy, reduce deficit costs, or be a government priority, which would benefit risk assets like crypto. Kirill Kretov, a trading automation expert at CoinPanel, pointed out that rising unemployment rates could improve Bitcoin and DeFi liquidity by raising rate cut expectations. Slower wage growth implies a relief in inflation pressure, making it more likely for the Fed to pivot earlier. The CME FedWatch tool shows that 55.3% of rate traders believe the June FOMC meeting is the earliest point for a rate cut this year, while the Atlanta Fed's GDPNow model has revised down the U.S. first-quarter economic growth rate to -2.4%, which, if realized, would be the first contraction since the first quarter of 2022, exacerbating recession concerns.

Analysts state that global economic uncertainty has led to an increase in bearish positions in the derivatives market, with the risk reversal index leaning more towards put options in the past 24 hours, reflecting concerns about intensified selling pressure. Options flow indicates that bullish sentiment may need to wait until the third quarter. Although $80,000 remains a key short-term support level for Bitcoin, upside potential is limited. Until a new narrative emerges, Bitcoin's correlation with the stock market may strengthen. Tariff risks persist, and volatility may increase ahead of this week's U.S. CPI and PPI data releases.