The U.S. Federal Reserve has frozen the benchmark interest rate on Wednesday, which aligns with the predictions from the CME FedWatch data previously cited by The Block and analysts.
According to The Block on the 19th, BRN Chief Analyst Valentin Fournier stated that while inflation is cooling and tariff concerns are easing, the slowdown in U.S. economic growth has raised stagflation concerns.
At the post-meeting press conference, Fed Chair Jerome Powell sounded dovish while expressing confidence in the "disinflation trend", but also pointed out solid job growth and resilient consumer spending that leave room for policymakers to maintain high interest rates.
The market is now focusing on September as the earliest potential rate cut. The BRN analyst told The Block via email that "the lack of urgency for rate cuts reaffirms the Fed's 'wait and see' approach, pushing the first cut expectations to September at the earliest." According to the CME FedWatch tool, futures traders see a 62% possibility of monetary easing at the Federal Open Market Committee (FOMC) meeting on September 17.
Stocks and U.S. stock index futures barely moved in pre-market trading the next day. Similarly, cryptocurrencies recorded limited price movements. According to The Block data, Bitcoin remained near $105,000, while Ethereum and Ripple also showed flat trends.
David Hernandez, a cryptocurrency investment specialist at 21Shares, said the hawkish background could still be favorable for Bitcoin. Hernandez argued that stagflation pressures from economic slowdown and "uncomfortably high" unemployment rates are likely to drive Bitcoin demand.
He stated, "The Fed mentioned that economic uncertainty has decreased but still very much exists," adding that "this uncertainty enhances Bitcoin's appeal as a hedge against potential policy errors."
Hernandez noted that easing elsewhere could drive liquidity especially into Bitcoin. On Thursday morning, the Swiss National Bank cut rates to zero. The European Central Bank has reduced borrowing costs eight times since June 2024.
The analyst opined that "being a decentralized and borderless digital asset, Bitcoin is uniquely positioned to absorb these capital inflows regardless of the Fed's domestic policy stance. Ultimately, the Fed's latest outlook paints an economic picture under pressure facing a challenging combination of slow growth and persistent inflation. Such an environment naturally spotlights assets that can provide protection from these pressures."
QCP Capital warned that seasonal factors could limit short-term rises. The trading firm mentioned the historically limited summer trading volume and the increase in Bitcoin options' put-call premium suggesting cautious positioning. They also pointed to month-end rebalancing and systematic deleveraging as additional headwinds for cryptocurrency prices.
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