The Federal Reserve is set to announce its interest rate decision at 2 p.m. ET, with Chair Kevin Warsh’s press conference following at 2:30 p.m. ET. While this meeting lacks the usual updated forecasts and “dot plot” that traders rely on, its impact on bitcoin remains significant for several reasons.
First, uncertainty surrounds the outcome. CME fed funds futures indicate only a 35% chance of a rate hike, an unusually divided market stance so close to the decision. Large hedge funds like Citadel predict an increase, arguing it would mark an end to forward guidance, a move Chair Warsh has supported for years.
Second, bond yields have already been on the rise. The 10-year and 2-year Treasury yields have broken through trendlines that had kept them in check since 2023. This breakout signals a clear upward momentum in yields, which tend to pressure riskier assets including cryptocurrencies.
Oil Prices and Inflation Pressure
Third, oil prices have surged nearly 20% this month amid stalled U.S.-Iran peace talks. This resurgence threatens to reignite inflation concerns after June’s temporary relief tied to falling oil costs. The Fed’s space for dovish commentary is therefore limited.
If the Fed leans hawkish or raises rates, bond yields could jump further, creating headwinds for bitcoin and other risk assets. On the other hand, if the Fed downplays inflation risks despite rising oil prices, we could see a sharp rally in crypto markets. Traders and investors should watch today’s decisions closely.
This information is provided for educational purposes and does not constitute financial advice.
