What does Fed’s hawkish pause mean for cryptos? SA analysts weigh in

The Federal Reserve held interest rates steady for the first time since its aggressive tightening cycle started in March 2022 but signaled two rate hikes could take hold this year to contain inflation pressures. Introducing Part 1 of our Crypto Roundtable, Seeking Alpha reached out to eight analysts for their opinions on what the implications of the central bank’s hawkish pause are for crypto-market investors. A handful of them, including Kennan Mell and Logan Kane , laid out a bull case for bitcoin ( BTC-USD ), the largest crypto by market cap, as the Fed’s lingering inflation fight creates an attractive backdrop for inflation hedges. Like other risk assets, prices of digital tokens like bitcoin ( BTC-USD ) and ethereum ( ETH-USD ) are sensitive to interest-rate moves in that they generally fare well when monetary authorities cut rates, (e.g. March 2020), whereas rate hikes are typically bearish for cryptos. BTC saw some pressure after the rate decision, dipping 2.8% to $25.1K at about 6:00 p.m. ET. “If investors come to believe that inflation is entrenched and the Fed continues hiking, it could be good for all inflation hedges, including Bitcoin,” Mell said. Conversely, SA’s John Miller said: “Sticky inflation means a hawkish Fed, and a continued headwind for cryptocurrencies as regulatory battles heat up into the fall.” Other SA analysts advised to keep an eye on bitcoin ( BTC-USD ) and equities, both of which have shared a negative correlation in recent weeks, with BTC off 6.4% and S&P 500 up 6% from a month ago . “If the rate pause turns out to be a ‘buy the rumor, sell the news’ event for stocks, we might see BTC and stocks re-correlate – just not in the way we might hope," said Mike Fay , Investing Group Leader of ‘BlockChain Reaction.’ David Huston , meantime, contended that “we should expect pressure in both markets because the time horizon for waiting for an official pause has been pushed out to later this year.” Here's the full Q&A Roundtable. More on crypto and the Fed Bitcoin: The Appeal Of Enduring Boredom Bitcoin: Still The King Of The Coins Why The Fed Has Just One Core Problem After The Rate Skip