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▲ Bitcoin (BTC)
The minutes from the US Federal Reserve (Fed) revealed a more hawkish stance than market expectations, increasing pressure on risk assets, including Bitcoin (BTC). With the possibility of prolonged high interest rates and even further rate hikes if inflation does not easily subside, the cryptocurrency market, which had recently shown a rebound, is once again facing liquidity pressure.
BeInCrypto reported on May 20 (local time) that the Federal Open Market Committee (FOMC) minutes from April 28-29 showed that a majority of members wished to completely remove the accommodative policy stance, and more than half indicated that further rate hikes might be necessary if inflation remains elevated. Although the Fed kept the benchmark interest rate unchanged at 3.50-3.75%, the minutes revealed growing policy divergence within the Fed.
This meeting saw the highest number of dissenting votes since 1992, with four members disagreeing. Stephen Miran advocated for a 25bp rate cut, arguing that policy could become excessively restrictive amidst increasing labor market risks. Conversely, Beth Hammack, Neel Kashkari, and Lorie Logan opposed retaining language that hinted at future easing. This effectively marked a direct clash within the Fed between concerns about an economic slowdown and vigilance against re-accelerating inflation.
Fed officials identified rising energy prices, tariffs, and geopolitical instability due to the Middle East conflict as key inflation risks. Fed staff estimated the March headline Personal Consumption Expenditures (PCE) price increase at 3.5%. This was an increase from 2.8% in February, suggested to be influenced by rising oil prices and supply disruptions due to Middle East tensions. Tariffs, transportation costs, fertilizer prices, and price pressures in the technology sector were also cited as variables making the disinflation process challenging.
Daniela Hathorn, Senior Market Analyst at Capital.com, told BeInCrypto before the minutes' release that "the market was looking to see if the Fed was more concerned about inflation persistence than growth risks." She explained that if the minutes were interpreted as hawkish, US Treasury yields and the dollar would rise, which could burden stock and cryptocurrency markets. Hathorn also analyzed that cryptocurrencies are increasingly behaving like high-beta macro assets, suggesting that hawkish Fed signals could trigger a correction after Bitcoin's recent rally.
Bitcoin investors are now focusing on liquidity expectations and bond market movements. Hathorn identified $76,000 to $74,800 as Bitcoin's key support zone, and suggested that $82,000 could be a major resistance level if the market interprets the minutes as dovish. Investors will monitor future inflation data and the June Federal Open Market Committee meeting to see if the Fed's hawkish stance persists. The market is also watching the possibility of a leadership transition from Jerome Powell to Kevin Warsh, assessing whether restrictive monetary policy will extend deeper into 2026.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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