"The Powell Resignation Meme" and the Truth Behind the Federal Reserve Decision and the BTC Market

The Federal Reserve’s decision on January 29 to keep the benchmark interest rate unchanged within the 3.50%-3.75% range was once interpreted by the market as a “calm signal” for the bulls. However, half a month later, Bitcoin has fallen from above $90,000 to $67,910, a decline of over 23%. The story behind this “resignation meme” is far more complex than the surface-level interest rate signals suggest and warrants deeper reflection.

The Complex Signal of the Fed’s “Hold Steady”: Decision Logic Amid Powell’s Resignation

Former Fed Chair Powell, who is scheduled to step down on February 12, indeed showed a cautious attitude in this decision—what could be called a “resignation meme,” referring to a cautious approach taken by an outgoing decision-maker to avoid market turbulence. Powell’s refusal to answer sensitive questions during the Q&A is a significant psychological signal—an outgoing central bank chief often chooses a “non-confrontational” route.

The details of the decision itself also reveal internal complexities within the Fed: two governors voted against the rate hold, advocating for a 25 basis point cut. This indicates that dovish forces still exist, and the market’s original expectation was for either “holding steady” or “continuing to cut.” From this perspective, maintaining rates is not necessarily a hawkish signal but rather a “wait-and-see easing” stance.

However, the market did not follow this logic. After the announcement, the US dollar index (DXY) rose in the short term, while risk assets did not rally as expected. This reflects investor concern that the “easing cycle is nearing its end,” which outweighs the optimism about “no rate hikes in the short term.”

Liquidity Shift and Spring Festival Market Reality: Reflection on Bitcoin’s Drop from $90K to $67K

The original optimistic view on the Spring Festival rally believed that capital reflow from Asia and holiday risk aversion would boost cryptocurrencies. But actual market performance was opposite—early February, during the Spring Festival, Bitcoin fell from the $90,000 level post-decision all the way down to $67,910, hitting a nearly three-month low.

The reasons behind this deserve in-depth analysis:

Macroeconomic Outlook Shift: Although the Fed kept rates steady, the market began reassessing economic prospects. Global growth expectations were downgraded, shifting investor focus from “seeking high yields” to “prioritizing defense.”

Illusory Liquidity: The 3.50% rate level, compared to previous highs, has indeed decreased, but this has not translated into actual capital inflows. Stockpiled liquidity has become more cautious in seeking high-yield assets—cryptocurrency volatility has become a “risk” rather than an “opportunity.”

Limitations of the Spring Festival Effect: Contrary to expectations, the traditional stock market closure during the Spring Festival did not lead to large capital inflows into crypto. Instead, a synchronized decline across global risk assets suppressed Bitcoin’s upward potential.

Technical Breakdown: Bitcoin broke key support levels at $80,000 and $75,000, triggering a chain of stop-losses and futures liquidations, which accelerated the decline.

Market Lessons from the Resignation Meme: The Dual Nature of Powell’s Gentle Stance

The “Powell resignation meme” demonstrates a complex duality in the actual market. On the surface, his gentle attitude—no rate hikes and hints of possible future cuts—should be bullish for the bulls. But in reality, this softness is also interpreted as a signal that the “central bank has no more bullets” and “economic growth lacks momentum.”

Investors’ logical shift is as follows:

• Old logic: No rate hikes by the Fed → ample liquidity → benefit risk assets
• New logic: Fed remains on hold → economic support needed → recession expectations rise → risk aversion increases

In this sense, Powell’s “tolerance” has not been the “biggest bullish signal” for the bulls as initially thought, but rather a turning point for the market to reassess risks.

Current Market State and Practical Strategy Adjustments

Given Bitcoin’s actual price of $67,910 (down over 23% from the expected $89,000), practical trading strategies must be fully revised:

Market Characterization: From Bullish Accumulation to Bearish Pressure Release

The current pattern is no longer a “consolidation after news release” but a “downtrend testing neckline support.” Around $67,000 is a critical short-term support; a breakdown could test the $60,000–$65,000 zone.

Practical Strategy Adjustments

Strategy A: Wait-and-See and Positioning

• Avoid chasing longs at current levels; patiently wait for a rebound confirmation.
• Watch key supports at $65,000 and $60,000; if these hold and rebound signals appear, consider phased entries.
• For cautious investors, temporarily hold cash and wait for clearer technical signals.

Strategy B: For those with heavy positions

• Do not hold core positions through the decline; consider partial profit-taking at $72,000–$75,000 rebounds.
• Prioritize risk management with stop-losses below $60,000.
• Moderately reduce core holdings to control risk within acceptable limits.

Strategy C: Contract traders for swing operations

• Direction: primarily short-term short positions, participate cautiously during rebounds.
• Key levels:
  • Resistance: $75,000–$77,000 (previous support broken)
  • Support: $65,000–$67,000 (current vicinity)
  • Last line of defense: $60,000
• Advice: Be cautious with short positions before support confirmation; control risk per trade.

Risk Alerts and Reassessment of Investor Decisions

Dollar Index Movements: Keep a close eye on DXY. If DXY continues above 104, it indicates a “recession logic” market rather than a “soft landing,” likely pushing Bitcoin down toward $55,000–$60,000.

Global Economic Outlook: Multiple institutions have lowered global growth forecasts in February, which will continue to support dollar strength and suppress risk assets.

Technical Risks: Bitcoin’s multiple breakdowns have damaged the upward trend. Unless it reclaims and stabilizes above $75,000, the short-term technical weakness is unlikely to reverse.

Conclusion: From the “Resignation Meme” to Rational Decision-Making

The Fed’s “hold” and Powell’s “resignation meme” ultimately did not lead to a market rally but became a turning point for risk reassessment. This case reminds investors that dovish signals do not necessarily mean rising asset prices; instead, they may indicate more complex macro challenges.

Currently, Bitcoin at $67,910, down over 23% from the end of January, investors should wake up from the original optimistic expectations and reorient around risk management, waiting for clearer market signals rather than blindly following the “central bank support” logic. The true story behind the resignation meme reflects the market’s complexity.