Fed Stagflation Risk Signal Could Be Bullish for Bitcoin, Analyst Says

The Federal Reserve is increasing progressively alert to stagflation risks—an uneasy premix of slowing maturation and rising ostentation that could situation policymakers.

While Chair Jerome Powell insisted that the system is successful "good shape" and emphasized that the cardinal slope is successful “a bully presumption to hold and see,” anterior to shifting policy, subtle changes successful the cardinal bank's argumentation connection pointed to heightened concerns implicit the economy’s direction.

Holding its benchmark involvement complaint dependable today, the U.S. cardinal slope acknowledged the increasing hazard of rising ostentation and unemployment — astir the explanation of stagflation, which past made an quality passim a sizable chunk of the 1970s. That script would permission the cardinal slope with constricted country to maneuver to stimulate a weakening system without further fueling inflation.

“The Fed is disquieted astir stagflation,” Zach Pandl, caput of probe astatine Grayscale, posted connected X aft the decision. “We deliberation that result would beryllium bully for bitcoin.”

In an earlier report, Pandl argued that rising tariffs lend to stagflation, which historically hurts accepted assets but benefits scarce stores of worth similar gold. “Bitcoin was not astir for past stagflations,” helium wrote, “but tin beryllium considered a scarce integer commodity and is progressively viewed arsenic a modern store of value.”

Bitcoin traded successful a choky scope pursuing the Fed’s announcement and Powell’s remarks. It concisely touched $97,500 earlier Wednesday connected optimism astir U.S.-China commercialized talks earlier settling backmost to $96,500 — up 1.6% implicit the past 24 hours.

The CoinDesk 20 Index (CD20), a broader gauge of the crypto market, was up conscionable 0.3% implicit the aforesaid period, weighed down by 1%-3% declines successful XRP, AVAX, UNI, NEAR, and AAVE.

Meanwhile, equities recovered modestly from earlier losses, with the S&P 500 and Nasdaq closing 0.4% and 0.3% higher, respectively.