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The Federal Reserve is expected to keep interest rates unchanged today, but that is not the main thing crypto traders are watching. Instead, all eyes are on new Fed Chair Kevin Warsh as he leads his first FOMC meeting.
With Bitcoin recovering above $65,000, traders are waiting to see whether his comments on inflation, liquidity, and the economy could fuel the next crypto market rally.
No Rate Cut Expected, But Markets Are Eyeing Warsh Speech
The Federal Open Market Committee (FOMC) will release its policy decision today, followed by Kevin Warsh’s first press conference as Fed Chair.
Markets are almost certain the Fed will keep its benchmark interest rate unchanged at 3.50% to 3.75%. Data from the CME FedWatch Tool shows a 99% probability of no rate change at this meeting.
At the same time, market expectations remain divided. While prediction markets show little chance of a rate hike today, Bank of America’s latest fund manager survey found that 40% of investors now expect at least one rate hike within the next 12 months, up sharply from 16% in May.
However, the focus is now on what Kevin Warsh says about inflation, the economy, and the overall market outlook.
The Key Words Traders Are Watching
According to investor Andre Jikh, one of the most important signals will be Warsh’s language around inflation.
If Warsh describes inflation as temporary or “transitory,” markets may view that as a dovish signal. Such a message could increase expectations for easier monetary policy later this year, potentially supporting Bitcoin, stocks, and other risk assets.
However, if he warns that inflation remains persistent, particularly due to rising energy costs and ongoing tensions in the Middle East, investors may view the message as hawkish. That could weigh on stocks and cryptocurrencies in the short term.
Falling Bond Yields Give Markets New Hope
Another key area Andre Jikh is eying is the Treasury market. He says that if Warsh hints that the Fed stands ready to support bond markets or improve liquidity conditions, investors could interpret that as a positive sign for risk assets.
Meanwhile, U.S. bond yields have already been falling. The 10-year Treasury yield has dropped from 4.68% to 4.42% over the past month, easing some pressure on financial markets.
Can Bitcoin Rally Higher After the Fed Meeting?
History shows Bitcoin often reacts sharply to Fed decisions. Since September, BTC has fallen roughly 10% within days after each of the last six FOMC meetings.
This time, however, Bitcoin has already recovered from its recent drop below $60,000 and is now trading around $65,700. A more market-friendly message from Warsh could strengthen bullish sentiment and push Bitcoin toward its next major resistance zone near $70,000.
Meanwhile, the rate decision may be predictable. What Kevin Warsh says afterward could be what truly moves Bitcoin.