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Fed’s hawkish rate hold keeps pressure on Bitcoin: Analysts
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- DeepHorus
The U.S. Federal Reserve held its benchmark interest rate at 3.75% to 4% on Wednesday, but its hawkish inflation message pressured Bitcoin. The 10-2 vote saw Governor Lisa Cook and Cleveland Fed President Beth Hammack favor a quarter-point increase. Fed Chair Kevin Warsh said inflation has exceeded the central bank’s 2% target for nearly six years. Markets expected the hold but not the hawkish tone, analysts said.
The decision keeps pressure on Bitcoin because elevated rates leave investors with a risk-free return near 4%, according to Iggy Ioppe, chief investment officer at Theo. “Markets had the hold priced, but not the hawkish tone,” Ioppe said. Bitcoin must compete with that risk-free rate for capital, he added.
Traders are focused on the Fed’s Dec. 8-9 meeting. CME FedWatch showed a 78.4% probability of a quarter-point increase by December and a 67.3% probability of at least one by March. Warsh declined to say whether the Fed would raise rates at year-end, saying “a lot of things can happen” before the group meets again in six weeks.
Bitget analyst Lewis Huang said Bitcoin’s near-term path may depend less on the Fed than on Treasury yields, the U.S. dollar and risk sentiment. With limited new direction from the Fed, those factors could drive price action.
Investors await Thursday’s personal consumption expenditures inflation report and earnings from major technology companies. Sygnum Bank chief investment officer Fabian Dori said the PCE data and “Mag 7” results will clarify whether AI capital spending is turning into revenue. Broader liquidity and financial conditions will likely shape the path to December, he added.
The Fed’s next move remains uncertain. Stronger inflation or continued dollar strength could reinforce pressure on Bitcoin, while softer data might ease rate-hike expectations. Analysts say the central bank’s hawkish stance keeps crypto markets cautious.
