Bitcoin Caught Between Hawkish Fed and Dovish Warsh
The Federal Reserve's January meeting minutes revealed a surprisingly hawkish committee. Several officials openly discussed rate hikes, setting the stage for a dramatic policy clash when Kevin Warsh takes over as chair this summer.
A Committee Tilting Hawkish — Right Before a Leadership Change
The FOMC voted 10-2 on Jan. 28 to hold rates at 3.5%-3.75%. Governors Christopher Waller and Stephen Miran dissented, preferring a quarter-point cut due to labor market risks.
However, the broader committee leaned the other way, warning that further easing amid elevated inflation could signal a weakened commitment to the 2% target. Several officials even suggested possible "upward adjustments" to the federal funds rate.
Powell Out, Warsh In — And a Policy Collision Looms
Chair Jerome Powell's term ends in May, with Warsh set to replace him. Warsh has advocated for lower rates, aligning with Trump's calls for cheaper borrowing. However, the committee's hawkish majority might not support this approach, complicating Warsh's confirmation and limiting early rate cuts.
If confirmed, Warsh's first meeting as chair would be in June. Although markets are eyeing this for potential cuts, the Fed's preferred inflation gauge is expected to rise, potentially delaying rate easing.
Asian Liquidity Returns, Amplifying the Selloff
Bitcoin saw a decline shortly after the minutes were released, dropping from around $68,300 to below $66,500. Asian traders returning from the Lunar New Year holiday contributed to the increased volume and selloff.
Coinbase CEO Brian Armstrong labeled the decline as psychological, indicating the exchange's ongoing investment in Bitcoin at these lower prices.
What Comes Next
The Fed's next meeting is on March 17-18, with a rate cut effectively off the table. The focus is now on whether Warsh can lead the committee toward cuts despite the hawkish majority and persistent inflation.
For Bitcoin, the current macro environment continues to pose challenges, with the combination of a hawkish Fed, contested leadership transition, and increased Asian liquidity pointing to potential volatility.
This article has been published in beincrypto.com via Yahoo News.
