Fed Holds Rates at 3.75%-4.00% but Leaves Room for More Hikes, Stoking Bitcoin Downside Risks
Summary
- The Fed held its benchmark rate at 3.75-4.00% while leaving room for another increase, a move that could keep downside pressure on Bitcoin, the report said.
- Theo's CIO said that in a high-rate environment, Bitcoin must compete with nearly 4% in risk-free returns.
- Sygnum Bank's CIO said PCE inflation data, major tech earnings, liquidity and financial conditions will shape the outlook for risk assets and Bitcoin.
Forecast Trend Report by Period
Bitcoin could remain under downward pressure after the Federal Reserve held its benchmark interest rate steady while leaving open the possibility of another increase, Cointelegraph reported. With markets having largely expected the pause, focus has shifted to the future path of rates and moves in the dollar and Treasury yields.
According to Cointelegraph on October 29, the Fed kept its benchmark rate at 3.75%-4.00% on October 28. Ten officials supported the decision, while Governor Lisa Cook and Cleveland Fed President Beth Hammack backed a 0.25 percentage-point increase.
Fed Chair Kevin Warsh said Americans have endured inflation above the committee's target for nearly six years and that bringing inflation down is the Fed's responsibility. He stopped short of signaling whether another hike would follow, saying it was difficult to say now what decision would be made at the next meeting in six weeks.
As of the report, CME FedWatch showed interest-rate futures were pricing in a 78.4% chance of a 0.25 percentage-point increase at the December meeting.
Iggy Ioppe, chief investment officer at tokenization platform Theo, said markets had expected the rate hold itself but had not fully priced in the hawkish tone. In a high-rate environment, Bitcoin must compete with nearly 4% in risk-free returns.
Bitget analyst Louis Huang said Bitcoin's short-term direction may hinge less on the Fed's decision itself than on U.S. Treasury yields, the dollar and broader investor sentiment.
Fabian Dori, chief investment officer at Sygnum Bank, said this week's personal consumption expenditures price data and earnings from major technology companies would be key variables in gauging the direction of risk assets. After that, liquidity and financial conditions will determine the market's path ahead of the December decision.
