Fed Inflation Doubts Leave Crypto Markets Stable

Although cryptocurrency prices remained relatively stable following the FOMC minutes, US stocks traded lower due to the small likelihood of aggressive decisions due to inflation concerns.

Despite positive Consumer Price Index (CPI) reports for April, Federal Reserve officials remain skeptical that progress in overcoming inflation justifies cutting interest rates.

According to the latest Federal Open Market Committee (FOMC) Minutesprice levels have allowed this year’s inflation rates to remain substantially above the Fed’s 2% target.

While some speakers at the policy meeting hinted at considering rate hikes, officials like Chairman Jerome Powell hinted against tightening economic policies. Federal Reserve Governor Christopher Waller previously said the central bank would require consecutive months of positive inflation data to take a dovish approach and ease interest rates.

Following the FOMC’s decision to maintain a short-term lending rate between 5.25% and 5.5%, US stocks fell slightly. The S&P 500 was trading around 0.27% lower according to Google Finance.

However, deVere Group CEO Nigel Green expects the Fed’s outlook to have less of an impact on investor sentiment in the coming months. “We expect the market bull run that has taken Wall Street’s main indices to new highs in recent weeks to continue,” Green said in a note obtained by crypto.news that a strong earnings season, recovery in China and Europe, as well as expected rate cuts if the US economy achieves a soft landing.

Stable Crypto Market Is Not Indicative of Bitcoin Hedging Status

Bitcoin (Bitcoin) as a hedge against inflation has long served as a rallying cry for the broader cryptocurrency community. The analyzes also support an argument in favor of so-called digital gold.

Year-to-date, crypto’s biggest token is up around 65%. The asset witnessed a surge in demand with the introduction of spot Bitcoin ETFsand analysts postulate that the reduce by half started a supply shock.

By comparison, the S&P 500 rose 11.9% in a bull cycle for U.S. stocks. If we stretch the time frame back five years, observers will notice an even larger growth gap. While Bitcoin is up 781.3% since 2019, the S&P 500 has only managed 87.7% in that time.

Bitcoin may have spent its first 15 years largely outside the U.S. financial market, but the cryptocurrency established its inflation-hedge status during years of recovery. So much so that the titans of Wall Street like it Microstrategy It is Black stone entered the scene.

BTC Analysis | Source: TradingView

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