Fed Minutes Flip Bitcoin's Rate-Cut Trade Into a Hike-Risk Problem!

The Federal Reserve's April meeting minutes landed Wednesday with no relief for Bitcoin traders: a majority of policymakers signaled that further tightening would likely become appropriate if inflation stays above 2%. The committee held its benchmark rate at 3.50%–3.75%, but four members dissented — the most divided Fed meeting since 1992 — and a growing bloc pushed to strip any easing-bias language from the official statement.

The macro shift is stark. At the start of 2025, futures markets were pricing two or more cuts before year-end and treating another hike as near-impossible. By May 20, CME FedWatch showed a 54.1% probability of a hike by December, with just 1.5% odds on any easing. The catalyst was Iran: the conflict drove energy prices sharply higher, pushed April CPI to 3.8%, and hardened policymakers who had been willing to look through supply-side shocks.