Fed's hawkish hold puts fresh pressure on Bitcoin, analysts say

what happened

Cointelegraph reports that Bitcoin may come under further pressure after the US Federal Reserve kept its benchmark rate in the 3.75% to 4% range while stressing concern about inflation. The vote was 10-2, with Governor Lisa Cook and Cleveland Fed President Beth Hammack backing a quarter-point increase.

Fed Chair Kevin Warsh said inflation has run above the central bank's 2% target for close to six years. "Americans… are still dealing with inflation that has been running above the Committee's objective for close to 6 years. It's our responsibility to get inflation down," he said. Warsh declined to say whether the Fed would raise rates at year-end.

Market pricing already points to a hike. According to CME FedWatch data, traders put a 78.4% probability on a quarter-point increase by December and 67.3% by March. Analysts quoted by the outlet note that at elevated rates Bitcoin competes with a risk-free rate near 4%, and its next move may depend more on Treasury yields, the dollar and risk sentiment. Attention now shifts to Thursday's PCE inflation report and earnings from large technology companies.

why it matters

A higher policy rate lifts returns on cash and bonds, making assets that pay no yield, including Bitcoin, less attractive to investors. Expectations of a hike by December or March keep that pressure in place, so upcoming inflation data and tech earnings matter for risk assets.

market impact

Bitcoin: higher US rate expectations and a hawkish Fed weigh on the crypto market

• ▼Bitcoin pressure down — competition with a near-4% risk-free rate and expected Fed hikes

tags

instruments