Following the Fed’s decision to maintain steady interest rates, Bitcoin’s price rose above $96,000, up 1.6%. Meanwhile, concerns about stagflation have emerged, prompting speculation that this economic scenario might benefit Bitcoin as a store of value. Other cryptocurrencies did not fare as well, experiencing minor declines.
In the wake of the Federal Reserve’s recent decision to keep interest rates steady, Bitcoin has seen a noteworthy uptick, trading above $96,000, marking a 1.6% increase in 24 hours. However, other cryptocurrencies like XRP, AVAX, and UNI have taken a bit of a hit, with modest losses reported. Analysts are now speculating that the Fed’s stance might actually signal a bullish trend for Bitcoin amidst rising inflation concerns.
The Fed’s latest policy statement raises alarms over the risks of stagflation—a troubling mix of high inflation coupled with rising unemployment. Chair Jerome Powell maintained that the economy is in decent shape but acknowledged subtle concerns in the Fed’s communication. This stalemate may leave the Fed with limited options to stimulate the economy without exacerbating inflation.
Zach Pandl, head of research at Grayscale, took to X to express that the Fed’s worries about stagflation could bode well for Bitcoin. In the past, rising tariffs have historically led economies into stagflation, negatively affecting traditional assets but giving a boost to scarce assets like gold. While Bitcoin didn’t exist during the last stagflation period, it’s increasingly regarded as a digital store of value.
Initially, Bitcoin seemed to respond well to the news, briefly hitting $97,500 due to optimism surrounding US-China trade discussions. However, it later retraced to settle around $96,500. Despite its gains, the broader CoinDesk 20 Index, which tracks the performance of several cryptocurrencies, only rose by a modest 0.3%, impacted by declines in notable assets like XRP and AAVE.
On the stock market side, there’s been some recovery from earlier losses, with the S&P 500 and Nasdaq inching up by 0.4% and 0.3%, respectively, offering a glimmer of hope amid the uncertainty. The overall financial climate remains tense as investors keep a close eye on inflation and employment trends, while enthusiasts of Bitcoin remain cautiously optimistic about future performance.
