Bitcoin Price to Sink? Fed Holds Rates at 3.50%-3.75%, Revives 'Higher for Longer' Warning
Key Takeaways
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Schiff says Strategy's latest share sale diluted Bitcoin exposure, with BTC yield per share falling to 4.5%.
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Supporters argue MSTR still beats Bitcoin over the long term, citing nearly six years of historical data.
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The debate boils down to dilution vs. long-term outperformance as Bitcoin accumulation slows.
Bitcoin absorbed its first policy decision of the Kevin Warsh era with a wobble rather than a breakdown, though the bond market's verdict raises harder questions for the weeks ahead.
The Federal Reserve voted 9 to 3 on July 29 to hold its benchmark rate at 3.50% to 3.75%, extending the pause to a fifth consecutive meeting, with Minneapolis Fed President Neel Kashkari, Dallas Fed President Lorie Logan, and Cleveland Fed President Beth Hammack dissenting in favor of a 25 basis point increase. Three dissents mark the most hawkish bloc of Warsh's tenure as Chair, a sharp shift from June's unanimous 12-member hold.
Price action stayed contained. Bitcoin (BTC) dipped around 1% to $63,890 on the announcement, before climbing above $64,400, up over 1% on the day, as the S&P 500 and Nasdaq trimmed earlier losses and gold rose 1.2%.
Ether (ETH) traded around $1,917 and XRP near $1.08, while the Crypto Fear and Greed Index stood at 28, an improvement from earlier Extreme Fear readings.
Bond Market Delivers the Real Message
Treasuries told a rougher story than the crypto tape. The 30-year yield pushed above 5.20% during the session, its highest level since 2007, prompting The Kobeissi Letter to declare that higher-for-longer is back.
Equity markets whipsawed through what the newsletter described as three swings totaling roughly $2.9 trillion in S&P 500 market cap, with the index dropping 85 points through midday, rallying 110 points into mid-afternoon, then shedding 120 points before the close.
Warsh gave traders little to hold on to. His statement described the economy's resilience as impressive while stressing that inflation remains elevated relative to the 2% target, with no soft target tolerated.
He characterized the policy statement as sticking to the facts while steering clear of guidance, adding that market participants are learning to play the ball, not the referee.
During the press conference, he rejected suggestions that July represented a routine pause, describing the meeting as an active assessment of policy options, and said June's softer inflation reading influenced policymakers "not much."
Criticism of the approach came from inside the institution's alumni ranks. Former Cleveland Fed President Loretta Mester, who spent a decade voting on policy, told the Wall Street Journal's Nick Timiraos the silence is not sustainable, saying, "I actually want more from my Fed."
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