Bitunix Analyst: Energy Inflation Risks Reshape Market; Fed May Enter Prolonged Observation Period

Huo Xing Finance reports that on May 12, the core shift in markets is no longer merely about whether the situation in Iran will escalate, but rather that energy shocks are beginning to trigger chain reactions with U.S. inflation dynamics, Federal Reserve leadership transition, and global demand for risk-off assets. Risks surrounding the Strait of Hormuz remain unresolved; Iran refuses to abandon uranium enrichment, while the U.S. continues signaling potential military action, keeping crude oil and gasoline prices elevated. Against this backdrop, the U.S. April CPI data is being viewed by markets as a critical turning point—not merely another episode of energy-driven inflation, but a growing concern that high oil prices may once again spread to housing, services, and the broader core price index. Current market expectations suggest the U.S. April headline CPI year-over-year growth could rise to 3.7%, the highest in nearly three years, while core CPI may rebound to 2.7%. Of greatest concern is not energy itself, but the possibility that housing inflation—rekindled by statistical revisions and renewed rent increases—could further undermine the primary force that has driven U.S. inflation lower over the past two years. If housing and energy pressures emerge simultaneously, market expectations for Fed rate cuts by year-end will continue to be pushed back, with investors beginning to price in the possibility of prolonged high interest rates. Meanwhile, the Federal Reserve’s leadership structure is entering a sensitive phase. Waller has cleared the Senate procedural hurdles and could formally assume the role of Fed Chair as early as this week—just as energy-driven inflation is reigniting, the White House is pressuring for rate cuts, and internal Fed divisions are intensifying. Markets fear that if oil prices remain elevated over the coming months, the Fed will be forced into an extremely reactive policy stance, caught between “fighting inflation” and “political pressure,” resulting in continued tightness in dollar liquidity conditions. In the crypto market, while BTC has recently remained range-bound at elevated levels, market structure is gradually shifting from “liquidity-driven” to “risk re-pricing.” If tonight’s CPI comes in higher than expected, the dollar and U.S. Treasury yields may strengthen again, suppressing risk appetite and slowing upward momentum for BTC. Conversely, if core inflation shows no clear signs of spiraling out of control, it could help sustain market expectations that liquidity conditions may still ease this year. What markets are now truly watching is no longer just whether the Fed will cut rates—but whether the world is re-entering a new era of structural high inflation driven jointly by energy, geopolitics, and supply chains.