Fed's Kevin Warsh keeps rates steady but prepares for a historic shift

The Fed made its first decision under Kevin Warsh: rates remain stable. But, the statement and economic projections take an unexpected turn, revealing a firmer stance against inflation. A surprise that marks the beginning of a new monetary era.

Fed: Kevin Warsh keeps rates stable

The Fed just froze its key rates after its first meeting under Kevin Warsh’s chairmanship, confirming market expectations. However, it was the statement accompanying the decision that made an impression. While observers anticipated continuity with the era of Jerome Powell, the Fed removed its dovish bias, clearly signaling that its next move could be a rate hike.

The updated economic projections confirmed this reversal. Indeed, where a rate cut was still considered three months ago, nine of the 18 FOMC members now anticipate a hike by the end of the year. Persistent inflation, fueled by soaring energy prices and geopolitical tensions, forced Warsh’s hand. The new Fed chairman, known for his rigorous approach to price stability, has thus laid the groundwork for a tighter monetary policy.

Crypto in turmoil: Bitcoin and Ethereum face the Warsh dilemma

For Bitcoin and Ethereum, the Fed’s decision is a cold shower. Historically, digital assets hate high rates, as a strong dollar and rising borrowing costs stifle liquidity, the lifeline fueling bull runs. With Warsh threatening to tighten the screws, the crypto market expects the worst… A brutal correction of BTC below $50,000 and ETH below $2,500 in the short term.

However, not everything is bleak. Indeed, maximalists remind that BTC could also shine in a context of persistent inflation. So if the Fed tightens too much, investors might rush to deflationary assets with BTC leading the way. Ethereum, meanwhile, bets on its technical updates to attract institutional investors despite a hostile macro environment.

The Fed under Warsh draws a line under the era of accommodative rates. For crypto, it is time for tough choices: flee or resist? And what if the real winner was the dollar? What about you, are you betting on a resilient bitcoin or a historic collapse?