CryptoSlate
The Federal Reserve's April meeting minutes, released Wednesday, told Bitcoin traders the opposite of what they had been hoping for: a majority of policymakers said some degree of policy tightening would likely become appropriate if inflation stayed persistently above the central bank's 2% target. The committee held the benchmark rate steady at 3.50% to 3.75%, but four members dissented — the most divided Fed meeting since 1992 — and a growing bloc wanted to strip the statement of any language suggesting cuts were on the way. By May 20, CME FedWatch was showing a 54.1% probability of a rate hike by December, with only 1.5% odds assigned to any easing. Bitcoin was trading around $77,300, roughly 38.7% below its October 2025 all-time high.
Why it matters
The shift is largely a story about liquidity. At the start of the year, futures traders were pricing two or more cuts before year-end and treating another hike as something close to impossible. That trade built up around a rate-cut regime in which cheaper money, falling yields and a softer dollar would keep pushing capital into risk assets including Bitcoin. CME's book has now done a full reversal, and Bitcoin's sensitivity to Fed policy runs almost entirely through that liquidity channel — risk appetite, the dollar, real yields — rather than through anything ideological.
The trigger was the situation in Iran. Energy prices pushed sharply higher, April CPI landed at 3.8%, and policymakers who had been willing to look through supply-side shocks became less willing as the conflict extended. Incoming Chair Kevin Warsh now takes over from Jerome Powell with a committee already repositioning around a more hawkish center of gravity.
Market impact
The week of May 15 made the mechanics visible. Iranian escalation pushed oil above $110, drove the 10-year Treasury yield to a 12-month high of 4.54% on May 15, lifted Fed hike odds, and triggered nearly $1 billion in Bitcoin ETF outflows that snapped a six-week inflow streak.
Frequently asked questions
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What did the Fed's April minutes actually say about the next policy move?
A majority of policymakers said some degree of policy tightening would likely become appropriate if inflation stayed persistently above the central bank's 2% target. The committee held the benchmark rate at 3.50% to 3.75%, with four dissents — the most divided Fed meeting since 1992.
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How has the rate path priced by markets changed since the start of the year?
At the beginning of the year futures traders were pricing two or more rate cuts before year-end. By May 20, CME FedWatch was showing a 54.1% probability of a rate hike by December and only 1.5% odds assigned to any easing — a full reversal in the expected direction of monetary policy.
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Why does Fed policy move Bitcoin even when rates don't actually change?
Bitcoin's sensitivity to the Fed runs almost entirely through liquidity: when cuts are expected, yields fall, the dollar softens, and investors are willing to hold volatile assets including BTC. When hikes are priced, those channels reverse at once, so a shift in expectations can move BTC before the Fed acts.
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What macro events drove the hawkish repricing?
The situation in Iran pushed energy prices sharply higher, April CPI landed at 3.8% well above the 2% target, and the 10-year Treasury yield hit 4.54% on May 15 — a 12-month high — before the April minutes confirmed the Fed is no longer leaning dovish.
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What would it take for Bitcoin to break out of this setup?
Coinbase analysts noted that a sustained expansion in Bitcoin's price range would likely require either a clear improvement in systemic liquidity or a definitive downward trend in inflation. The April minutes confirmed that neither is visible right now, and the regulatory tailwinds around a friendlier SEC and…
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