The Fed held rates — but Bitcoin is still exposed

As we already covered, the Fed held its benchmark rate at 3.50-3.75% following its July 29 meeting — the fifth straight decision with no change. But the vote itself was unusually tense: it passed 9-3, with three committee members — Beth Hammack, Neel Kashkari, and Lorie Logan — voting for an immediate hike.

Bitcoin dipped to $62,913 — a two-week low — ahead of the announcement, then bounced back to the mid-$64,000s. Trading volume stayed moderate at around $28 billion, suggesting the market had partly priced in exactly this outcome beforehand.

Fed Chair Kevin Warsh added extra pressure with his own words: "There is no soft inflation target" — confirming that any inflation reading above 2% is unacceptable to him, and risk assets slipped slightly on the remark.

“There is no soft inflation target”

— Kevin Warsh, Fed Chair

Warsh keeps breaking from the 30-year playbook of previous Fed chairs: instead of guiding markets ahead of time, he's betting on a "good family fight" inside the committee and reacting to incoming data as it arrives. Bank of America notes the Fed hasn't hiked when markets priced in less than 60% odds of a hike since 1994 — meaning the current level of uncertainty is genuinely unusual for recent decades, CryptoSlate notes.

Analyst Jim Bianco considers a 35-40% probability of a hike a reasonable estimate, even though futures are pricing in only about 10 basis points of tightening — well below a standard 25.

Here's what will determine whether the bounce holds:

• inflation and employment data over the coming weeks
• the September Fed meeting — which becomes pivotal if progress toward the 2% inflation target stays unclear
• external factors like geopolitics and oil prices, which continue to drive correlation with equities

I'll also add my own take: we were all expecting some kind of reversal in Bitcoin yesterday, and unfortunately it didn't happen. Bitcoin is still trading in the $63,500-64,500 range, and there's no clear read yet on whether — or when — it breaks out of it, CryptoTimes reports.

This article is for informational purposes only and does not constitute investment advice.