New Fed Era Begins, Bitcoin and Altcoins Bleed
The cryptocurrency market experienced selling pressure in the last 24 hours after the United States monetary authority signalled a tighter (hawkish) stance than the market anticipated. In the Federal Open Market Committee (FOMC) meeting that concluded on Wednesday US time, the Federal Reserve (The Fed) decided to maintain the benchmark interest rate at 3.50% - 3.75%. Although the interest rate level remained unchanged, the statements and projections from the new Fed Chair, Kevin Warsh, triggered concerns among financial market participants regarding the continuation of global liquidity tightening. Bitcoin (BTC) responded to this sentiment with a daily correction approaching 2%, validating projections that the area above $75,000 previously represented a temporary relief rally boundary.
Based on the latest trading data, Bitcoin (BTC) was traded at $64,357.67. The primary crypto asset recorded a daily decline of -1.99%, although on a weekly basis it still maintained positive growth of +3.83%. This selling pressure was directly triggered by the increase in US bond yields following The Fed’s statement. A similar condition was experienced by Ethereum (ETH), which was at $1,748.22, correcting -2.23% in the last 24 hours. However, cumulatively over the week, ETH still posted a positive performance of +6.84%. This decline reflects investor caution, tending to limit exposure to risky assets.
In the altcoin sector, Hyperliquid (HYPE) recorded significant volatility. Despite experiencing a daily correction of -4.00% to $71.71, HYPE still led weekly gains among major assets with an impressive surge of +32.27%. Meanwhile, Zcash (ZEC), which had previously become an alternative hedging instrument during heightened geopolitical tensions, continued its daily decline of -5.78% to $479.74, reflecting adjustments in investor capital positioning as the initial draft of a US-Iran peace agreement began to move.
The results of the first FOMC meeting led by Kevin Warsh brought several structural changes that were carefully analysed by market participants: The policy of maintaining interest rates at 3.50%-3.75% was taken without dissent. However, the dot plot projections showed a 9-9 split among committee members, where the median projection now points to a potential 25 bps increase by the end of this year. Warsh confirmed he did not provide personal projections in the Summary of Economic Projections (SEP), consistent with his view that forward guidance can limit future monetary policy flexibility. As part of internal reform, The Fed formed five new task forces to evaluate communication strategy, the balance sheet, data sources, labour productivity, the impact of artificial intelligence (AI), and the approach to inflation. Warsh emphasised the committee’s absolute commitment to ‘price stability’. This hardline stance on inflation was immediately responded to by the bond market, causing the 2-year Treasury yield to surge by 14.4 bps. A new communication step was demonstrated through the FOMC statement text, which was trimmed to just 130 words, reducing market interpretation guidance. Beyond the FOMC results, Warsh’s statement before the Senate that President Trump never asked him to promise a rate cut further reinforced the central bank’s independence and strengthened the higher-for-longer interest rate narrative.
Fundamentally, Warsh’s leadership is expected to have a dual impact on the digital asset industry. In the short term, tight monetary policy is certain to reduce global liquidity, which is the fuel for risky assets, thereby depressing Bitcoin’s price. However, for the long term, Warsh’s personal view categorising Bitcoin as ‘digital gold’ and a ‘policeman’ for central bank policy errors is projected to increase institutional investor confidence in the BTC market structure. Financial disclosures show that the former Morgan Stanley banker has indirect exposure to digital assets and Web3 through venture capital investments. His background as an advisor at the Duquesne Family Office owned by legendary investor Stanley Druckenmiller also strengthens his practical understanding of this new asset class. Although Warsh divested these assets to comply with office ethics rules, this track record makes him the first Fed Chair with deep literacy regarding global crypto architecture. Conversely, Warsh’s sceptical attitude towards the majority of altcoins, which he called ‘software pretending to be money’, is expected to weaken institutional capital flows to the non-Bitcoin sector, limiting the adoption of speculative instruments without strong basic utility.
With the market’s focus returning to monetary tightening under The Fed’s new era, the technical strengthening that occurred some time ago is confirmed to have ended. The increasing probability of further rate hikes to dampen domestic structural inflation places the risky asset market in a medium-term downtrend. The strategic projection remains unchanged. The primary target for maximum capital deployment is conservatively maintained at the price range of $40,000 to $45,000.