Fed Inflation Doubts Leave Crypto Markets Stable

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

Despite positive reports on the consumer price index (CPI) for April, Federal Reserve officials remain skeptical that progress in beating inflation justifies cutting interest rates.

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

While some stakeholders at the policy meeting indicated they were considering a rate hike, officials such as Chairman Jerome Powell hinted against tightening economic policies. Federal Reserve Governor Christopher Waller had previously said the central bank would need consecutive months of positive inflation data to take an accommodative approach and ease interest rates.

Following the FOMC’s decision to maintain a short-term lending rate of 5.25%-5.5%, US stocks fell slightly. According to Google Finance, the S&P 500 index fell about 0.27%.

However, Nigel Green, CEO of the deVere Group, expects the Fed’s outlook to have less of an impact on investor sentiment in the coming months. “We expect the bull market run, which has taken major Wall Street indexes 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 should the US economy achieve a soft landing.

The flat cryptocurrency market is not indicative of Bitcoin’s hedge status

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

Year to date, the cryptocurrency’s largest token is up about 65%. The asset saw an increase in demand with the introduction of spot Bitcoin ETFsand analysts hypothesize that the halving initiated a supply shock.

By comparison, the S&P 500 is up 11.9% in a bullish cycle for U.S. stocks. If the time horizon is extended five years, observers will notice an even wider growth gap. Where Bitcoin is up 781.3% since 2019, the S&P 500 has only managed 87.7% over the same period.

Bitcoin may have spent its first 15 years largely outside of the U.S. financial market, but the cryptocurrency has established its status as an inflation hedge for years on the rebound. So much so that the titans of Wall Street like it MicroStrategy AND Black rock they entered the scene.

BTC Analysis | Source: TradingView

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