This was the first decision under new chairman Kevin Warsh, who said there had been a tough debate before the vote and vowed the central bank would achieve price stability. A more hawkish Federal Reserve means tighter financial conditions, and the liquidity that supports risky assets such as cryptocurrencies tends to dry up.
Stocks also liked the news this week, with other developments also helping. President Donald Trump signed an interim agreement to end the war with Iran and reopen the Strait of Hormuz, and the deal went into effect.
S&P 500 futures rose as much as 0.9% and Nasdaq futures rose 1.5%, while Brent crude oil fell towards $78 per barrel. Cryptocurrencies did not respond to the bid, a sign that they are currently trading more focused on the Fed than geopolitical relief.
Analysts expect Bitcoin to remain range bound until a clearer catalyst emerges.
“Barring a major trigger, we expect Bitcoin to continue trading in the $60,000 to $70,000 range for the next few weeks,” said Gerry O’Shea, head of global market insights at HashDex, citing the signing of the CLARITY Act or further tensions between the U.S. and Iran as potential triggers for a break out of this range.
He added that while sentiment has weakened as IPOs and AI stocks have taken attention away from cryptocurrencies, he expects capital to return as institutional investor interest increases and regulations formalize.
