Fed inflation doubts leave crypto markets flat

While crypto prices remained relatively stable following the FOMC minutes, US stocks traded lower due to the slim chance of hawkish decisions due to inflation concerns.

Despite positive consumer price index (CPI) reports in April, Federal Reserve officials remain skeptical that progress in reducing inflation will justify lowering interest rates.

Price levels have allowed inflation rates this year to remain significantly above the Fed’s 2% target, according to the latest Federal Open Market Committee (FOMC) Minutes.

Although some stakeholders at the policy meeting stated that interest rate hikes were being considered, officials such as Chairman Jerome Powell hinted that they were against tightening economic policies. Federal Reserve Governor Christopher Waller has previously said the central bank would need consecutive months of positive inflation data to take a dovish approach and ease interest rates.

US stocks fell slightly following the FOMC’s decision to maintain the 5.25%-5.5% short-term lending rate. The S&P 500 traded down about 0.27%, according to Google Finance.

But deVere Group CEO Nigel Green expects the Fed’s outlook to have less impact on investor sentiment in the coming months. “We expect the markets’ bull run, which has driven Wall Street’s major indexes to new highs in recent weeks, to continue,” Green said in a note obtained by crypto.news. Interest rate cuts are expected if the US economy makes a soft landing.

Flat crypto market not indicative of Bitcoin hedge status

As a hedge against inflation, Bitcoin (BTC) has long served as a rallying cry for the broader cryptocurrency community. Analytics also support the claim called digital gold.

Year-to-date, crypto’s largest token is up around 65%. The asset has witnessed increased demand with the launch of spot Bitcoin ETFs, and analysts suggest that the halving has introduced a supply shock.

By comparison, the S&P 500 is up 11.9% during the bull cycle for U.S. stocks. Move the time frame back five years and observers will notice an even larger growth gap. Bitcoin has gained 781.3 percent since 2019, while the S&P 500 has only managed 87.7 percent in that period.

Bitcoin may have spent its first 15 years largely outside the US financial market, but the cryptocurrency has been bullishly establishing its inflation hedge status for years. So much so that Wall Street giants such as MicroStrategy and BlackRock entered the scene.

BTC analytics | Source: TradingView