There is an interesting market phenomenon: when consumer confidence weakens, crypto prices instead rise — it's like a 'reverse thermometer,' the colder it gets, the hotter it becomes.

Last night, the University of Michigan released its latest Consumer Sentiment Index final value. The data is 52.9, below the previous 53.3 and the expected 53.4. It sounds like a percentage number, but the underlying logic is key: a decline in consumer confidence means people are less optimistic about the economic outlook. Once this pessimism spreads, the rationale for the Federal Reserve to continue aggressive rate hikes diminishes.

And this is a positive signal for crypto assets. The essence of Fed rate hikes is to channel money into safe assets (mainly bank deposits), leading to a sell-off of risk assets. High-volatility assets like Bitcoin and Ethereum are most vulnerable during rate hike cycles because money tends to bypass them. So when consumer confidence data falls short of expectations, the market automatically interprets it as: 'The Fed might slow down.' As a result, funds flow back into the crypto space.

There is a classic historical example. In November last year, when US CPI data unexpectedly declined, the market immediately sensed a 'peak in inflation,' and Bitcoin surged by 8 points that day. Essentially, the logic is — better inflation data → possible slowdown of the Fed → risk assets gain opportunities. Gold, silver, and oil follow the same pattern.

However, there is a more troublesome observation: the market's sensitivity to 'Fed pivot' expectations now far exceeds the reaction that data itself should trigger. What does this mean? Even a 'soft data' indicator like consumer confidence missing expectations is endlessly interpreted by the market as a 'precursor to policy easing.' In plain terms, everyone has been holding onto the rate hike cycle for nearly two years, eager to find a reasonable excuse to jump in.

This creates a hidden risk: the current rally is largely driven by sentiment, not closely tied to actual economic fundamentals. If next week’s non-farm payrolls suddenly surprise to the downside (or come in very strong), the market will instantly switch to expecting a 'rate hike restart,' and crypto prices could see sharp corrections. The volatility could be far beyond your imagination.

So, the current situation is like walking a tightrope: the weaker-than-expected consumer confidence index has indeed opened a window for the crypto market, but how long can this window last? This Friday’s non-farm payroll data will be the real test. If the jobs report is strong, this rebound could be abruptly interrupted.