The Federal Reserve decided to keep interest rates steady at 3.50%-3.75% for the fifth time in a row, but the reaction across markets was anything but uniform. The decision itself wasn't unanimous three members pushed for a quarter-point increase, highlighting ongoing caution amid global turmoil.
Despite the Fed’s optimism about steady economic growth, tensions in the Middle East are casting a shadow, keeping inflation stubbornly above the 2% goal. This unease spilled over quickly; U.S. stocks tanked, with the Dow falling 2.19%, the S&P 500 down 1.5%, and Nasdaq dipping nearly 1.74%.
Bitcoin mirrored this sharp whipsaw action, initially surging to $64,700 before sliding below $63,300, then bouncing back to hover around $64,000. Ethereum struggled more, clinging just above $1,900, as analysts debated Fed Chair Kevin Warsh’s inflation strategy and what it means for crypto and equities.
Bitcoin ETFs’ recent $526 million outflows hinted at a cautious pullback ahead of the rate announcement, as Bitfinex experts noted a brief risk-off mood rather than a full institutional exit. on Fed day, U.S. spot Bitcoin ETFs reversed course with a $32 million inflow, breaking a four-day streak of losses.
Ethereum’s relative stability was seen as a defensive hedge against Bitcoin’s volatility. Still, for this pattern to hold water, Bitcoin needs to hold its ground moving forward.
The market now assigns a 65% chance to a Fed rate hike in September, up 10% since the pause, fanning fears that further tightening could rattle risk assets for months to come.
This content is for informational purposes and does not constitute financial advice.
