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Financial markets have effectively priced in a 25-basis-point rate hike at the U.S. Federal Reserve’s September Federal Open Market Committee meeting, with some additional tightening this year also already reflected, CoinDesk reported. The outlet said the current backdrop is a nightmare for Fed Chair Kevin Warsh, as less-hawkish-than-expected remarks could weaken the dollar while lifting long-term Treasury yields amid inflation and U.S. debt concerns. That could trigger near-term selling pressure on risk assets, but later turn supportive for Bitcoin and gold, according to the report.
CoinDesk added investors may still view the Fed’s monetary policy as accommodative and come to expect further rate hikes, while confidence in the central bank’s ability to contain inflation could also erode. In that scenario, Bitcoin could draw attention as a store of value that can avoid currency debasement and Treasury risk, potentially rising after an initial bout of selling, according to the analysis.