Fed Decision Could Turn Bitcoin Rebound into Trap
Bitcoin regained its spot above $65,000 on Monday after a temporary pause in US-Iran strikes and a decrease in oil prices. The largest cryptocurrency rose about 1% to $65,155, while Ethereum gained 4% to around $1,964, its highest level since early June.
The move came as Washington halted its strikes on Iran, and Tehran said it would suspend attacks as long as the United States did the same. This respite in tensions helped revive demand for risk assets ahead of a pivotal Federal Reserve meeting.
However, this rebound is fragile because oil prices have sharply altered expectations for US interest rates. The Fed's decision on Wednesday could either extend Bitcoin's rebound or put renewed pressure on it. A quarter-point hike would represent the clearest tightening surprise, while a hold paired with hawkish guidance could produce a similar repricing across rates markets.
Chair Kevin Warsh has given markets less forward guidance than investors became accustomed to under previous Fed leadership, making his press conference on Wednesday unusually important. Even if the Fed holds rates, Warsh's message will be crucial in determining the direction of Bitcoin and other risk assets.