Fed's Warsh defends hawkish rate hold as BTC, ETH slide
The new Fed chair is staking his credibility on price stability over risk-asset relief, a stance that sets the tone for every cut expectation priced into markets.
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The new Fed chair is staking his credibility on price stability over risk-asset relief, a stance that sets the tone for every cut expectation priced into markets.
The pledge puts Fed independence at the center of tomorrow's rate call, giving markets a clearer read on the administration's stance toward monetary policy.
Governor Ueda tried on a hawkish tilt and markets shrugged it off: USD/JPY round-tripped, October hike still priced in, and the soft-yen liquidity that flows into risk assets stays open for Bitcoin.
Downside protection is gone while $5B in upside options sits exposed to whatever the Fed delivers, and long-term holders are now the only wall under $64,000.
The dissent is the signal: three FOMC voters wanted a hike at the same meeting the chair kept policy on hold, with the committee citing Middle East energy shocks as the reason inflation stays above…
A sixth straight pause is the base case, but a credible 30% is now pricing a quarter-point hike, and Citadel Securities and UBS are the names giving the surprise read oxygen.
BTC held above $63K and gained ~6% in July while semis fell nearly 20%, and Block Scholes' Thahbib Rahman says even a soft-talking Warsh could extend the divergence.
Crypto markets priced the oil shock before the Fed even met: a hawkish hold would unwind the relief rally the same way a surprise hike would, and neither solves the rate pressure already baked in.
The decision keeps borrowing costs at their current level as policymakers weigh persistent inflation data against signs of slowing growth.