Crypto
FOMC Minutes Reveal Hawkish Split, Rate Hike Odds in Focus for Bitcoin
Bitcoin faces fresh pressure as hawkish Fed signals keep rate hike expectations alive despite growing uncertainty over inflation.
22h ago 4,280
BLOCKINSIDERLoadingBitcoin faces fresh pressure as hawkish Fed signals keep rate hike expectations alive despite growing uncertainty over inflation.
The FOMC minutes showed that the U.S. Federal Reserve unanimously kept interest rates unchanged while agreeing that monetary policy remains restrictive.
However, policymakers expressed differing views on the inflation outlook, with some warning that price pressures could stay elevated for longer.
The minutes revealed a more hawkish tone, with a few officials arguing there was already a case for a rate hike at the June meeting. Many members still see the possibility of at least one additional rate increase this year if inflation does not continue to moderate.
Apart from persistent inflation, AI-driven demand, tensions in West Asia, and tariffs were reasons for expecting rate hikes this year.
Overall, the Fed emphasized a data-dependent approach, avoiding firm guidance on future rate moves. The key message for markets was that rates are likely to stay higher for longer, with further tightening remaining possible if inflation proves persistent.
“In the Desk survey, the median of the modal paths of the federal funds rate implied no changes in the target range through the beginning of 2027 and one rate cut in the second quarter of next year. Market pricing suggested that one rate hike was priced for mid-2027, but the manager noted that these measures were likely boosted, in part, by term premiums,” the minutes highlighted.
The June statement already shifted tone. Officials dropped earlier language hinting at rate cuts. Nine of 18 committee members projected at least one hike before year end. Eight saw no change, and one expected a cut. The median rate projection jumped to 3.8 percent from 3.4 percent in March.
That split rattled risk assets in June. Bitcoin and gold both fell within minutes of the announcement. Treasury yields climbed as traders repriced the odds of tighter policy ahead. Stocks also dipped, with the Nasdaq and S&P 500 each shedding roughly 1 percent.
“One thing is certain: future policy is heavily contingent on the political situation in the Middle East. If we can tease out any forward guidance from the minutes, it would be the committee is working through a wide range of scenarios and will not commit to a specific scenario until the incoming data provides necessary clarity,” Jeffrey Roach, chief economist at LPL Financial stated.
Sentiment has since cooled some. A weaker June jobs report trimmed near-term hike bets. Bitcoin had recovered toward $63,000, before falling back down towards $62,200 this week.
CME FedWatch data puts July hike odds near 30%. Traders still assign about 40 percent odds to a hike by December, based on current futures pricing.
Furthermore, this hawkish reading could push yields higher and pressure Bitcoin again. A softer tone could ease that pressure and support a relief rally across crypto and equity markets alike.
Notably, the FOMC felt that these post-meeting minutes should be shorter than the usual length. Participants felt that they should not repeat statements and wordings of the previous post-meeting minutes as that could indicate an easing bias in the committee.
The committee’s cautious approach towards indicating their outlook for an easing scenario signals a higher likelihood for a rate-hike in upcoming decision announcements.
Improving yield and a strengthening dollar could hurt Bitcoin and other risk asset. However, if the AI-driven demand exacerbates its inflationary pressure on the economy, it could favor BTC. Notably, while the productivity-based gains from AI will ease inflation, they are not here yet.
Bitcoin traded at $62,633 following the release of the FOMC minutes, slipping nearly 1% as the market showed a muted reaction to the Federal Reserve's latest policy outlook. The modest decline suggests traders remain cautious, with macroeconomic uncertainty continuing to influence Bitcoin price action and limiting strong bullish momentum in the near term.
Bitcoin price remains capped beneath a major descending trendline that has dictated the asset's direction for nearly two months. As long as this resistance holds, sellers could retain control and drive BTC toward its next key support at $60,000. A break below that level may trigger another wave of downside pressure.
A decisive breakout above the downtrend line would invalidate the prolonged bearish structure and strengthen the bullish outlook. Such a move could propel Bitcoin above $65,000, confirming renewed buying interest. If momentum accelerates, BTC may extend its recovery toward the psychologically important $70,000 resistance level.
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