Recently, Federal Reserve Chairman Powell's speech at the Jackson Hole meeting has sparked heated discussions in the market, hinting at a possible 25 basis point rate cut in September. This news immediately triggered optimism on Wall Street, with both the stock and bond markets rising. However, we need to view this expectation with caution, as the Federal Reserve's decisions are primarily based on economic data rather than market sentiment.

The most closely watched economic indicator next week will be the July core PCE data released on Friday. If inflation cools less than expected, even if Powell maintains a dovish stance, the Federal Reserve may act cautiously and not easily take measures to cut interest rates. In addition, speeches from several Fed officials, GDP revisions, and consumer confidence index data will also affect market direction.

It is worth noting that over-leveraging interest rate cuts may carry risks. Last year, the market experienced a similar situation with strong expectations for rate cuts, but subsequently, inflation rebounded, and the Federal Reserve adopted a hawkish stance, leading to a significant decline in asset prices such as Bitcoin. Currently, market sentiment is high, but if economic data falls short of expectations, it may trigger a significant pullback.

For the cryptocurrency market, price increases driven by liquidity expectations often lack a solid foundation. If the expectation of interest rate cuts fails, investors may quickly withdraw from risk assets, including Bitcoin and other cryptocurrencies. In the short term, the market is betting on a rate cut in September, but in the long term, the persistence of inflation is the real challenge.

Overall, the market will face two possibilities next week: either sustained optimism brought about by the fulfillment of expectations, or sharp fluctuations caused by poor data. Investors should closely monitor the upcoming economic data, especially the PCE index, to reasonably assess market risks and opportunities. Regardless of how the market moves, maintaining a rational and cautious investment attitude is a wise choice.