Recently, the crypto world has been stirring again. BTC plunged, long positions were liquidated for $550 million, and the market is filled with despair. Many are still obsessively watching CPI data and every word from the Federal Reserve, trying to find clues about the market trend. But honestly, this line of thinking is fundamentally wrong.

The key issue isn't the inflation data itself, but that—the Fed's 2% inflation target has long become a worthless check.

**Why the 2% inflation target is already bankrupt**

This target has existed for over 8 years, fundamentally relying on five preconditions: global supply chains suppressing costs, ample labor mobility, cheap energy prices, government fiscal constraints, and manufacturing shifting overseas. None of these five conditions exist anymore.

The Federal Reserve itself knows this. In 2020, they played a trick by switching to an "average inflation target," allowing inflation to temporarily exceed 2% to make up for previous shortfalls. And what happened? It stayed above 4% for more than four years. The current inflation rate is like burnt residue stuck to the bottom of a pot—unable to be lowered, with prices only continuing to rise.

Recently, Powell also said that tariffs are just "one-time price increases," which is clearly talking nonsense. Supply chain reshoring, geopolitical tensions, and a surge in military and infrastructure investments—these are structural factors that push prices higher in the long term. Spending money on AI and energy infrastructure while expecting inflation to stabilize at 2%? That’s absurd.

**The Fed’s real game: controlling expectations, not controlling inflation**

Once you see through this, you'll understand what the Fed is really doing now. They have abandoned the 2% target, and their real task has become—preventing inflation expectations from spiraling out of control.

That’s why you see them repeatedly hinting at "possibly slowing down rate hikes" or "possibly maintaining high interest rates." These statements seem contradictory but are actually part of a psychological game. As long as the public believes that "the central bank still has control," inflation won't become a self-fulfilling prophecy.

The lesson for the crypto market is straightforward: don’t bet on the Fed’s rate cut cycle; that window might be much shorter than you think. The real opportunity lies in understanding this shift—when policy moves from pursuing low inflation to managing inflation expectations, the logic of capital allocation will fundamentally change.

Digital assets as an inflation hedge will become even more prominent. Traders who only follow CPI data will eventually be educated by the market.