Today and tomorrow, June 17-18, the global financial community, including the rapidly developing crypto sector, will be focused on another meeting of the Federal Open Market Committee (FOMC). In an era of unprecedented macroeconomic uncertainty and geopolitical risks, the Fed continues its wait-and-see tactic. And, judging by the circumstances, crypto investors should prepare for the continuation of this regime rather than an immediate 'liquidity injection.'
FOMC: Between a rock and a hard place of macro and policy
The fundamental mission of the FOMC - maintaining price stability and maximum employment - is complicated to the extreme today. Their key tool, the federal funds rate, is used to manage the overall liquidity in the system. However, under current conditions, any decision is made not only based on economic data but also influenced by powerful external factors.
We cannot ignore the ongoing political backdrop. POTUS Donald Trump's demands for immediate and aggressive rate cuts put pressure on the Fed. Although the Committee declares its independence, such rhetoric adds noise and uncertainty to the macro landscape, which is never a positive signal for sentiment-sensitive assets like cryptocurrencies.
June meeting: Expecting a conservative forecast
The current federal funds rate, which is in the range of 4.25%-4.50%, is likely to remain unchanged. Although futures markets demonstrate nearly a 70% probability of a rate cut by the end of the year, our analytical optics suggest that the Fed will be extremely cautious. Their commitment to 'data dependency' means that a sustained return of inflation to the target of 2% and convincing signals of a slowdown in the labor market are necessary conditions for easing policy, not just desired scenarios.
Special attention will be paid to the Summary of Economic Projections (SEP), known as the 'dot plot.' This chart often serves as a sobering factor for overly optimistic market sentiments. It is possible that the 'dots' will again be above expectations, demonstrating a 'hawkish' consensus within the Committee. For crypto investors, this means that hopes for a quick influx of 'cheap money' may be premature.
Geopolitical Driver: The Middle East and Inflation Threat
An additional, and perhaps the most unpredictable factor, is the conflict in the Middle East. This region, a global center for energy production, carries risks for global inflation. Any escalation or even lingering instability could provoke a spike in oil prices. For the Fed, this creates a dilemma: lowering rates amid rising energy prices could only spur inflation caused by external shocks. This situation only reinforces the 'wait-and-see' stance, as the central bank cannot control geopolitical factors but must account for their impact on price stability.
Implications for the cryptocurrency market: An era of caution
For digital assets that flourished under 'quantitative easing' and low rates, the current position of the Fed means a continuation of macroeconomic 'headwinds':
* Delayed liquidity influx: Without a clear signal for rate cuts, 'liquidity' will not flood the markets as quickly as many expect. This means that broad bullish rallies fueled by excess money remain in question. The crypto market will have to rely on internal drivers and innovations, rather than macroeconomic euphoria.
* Suppressed risk appetite: High rates maintain the attractiveness of traditional assets and deposits, reducing investors' willingness to take risks, which directly impacts volatile assets like altcoins.
* Changing narrative: The narrative of 'easy money' gives way to a more complex picture. The focus shifts to the fundamental value of projects, their real-world applications, and their ability to survive in a higher-cost capital environment. Bitcoin may retain its role as 'digital gold' as a hedge against inflation risks, but its behavior will depend on how markets assess the impact of the Middle Eastern conflict on the global economy.
* Increased volatility: The combination of uncertain monetary policy, political pressure, and geopolitical shocks is a perfect storm for volatility. Cryptocurrencies, already known for their instability, may exhibit even sharper fluctuations.
Conclusion: Preparedness for a prolonged marathon
The FOMC meeting on June 17-18 is unlikely to bring breakthrough decisions. Rather, it will be another confirmation of conservative, data-dependent policy complicated by external factors. For experienced crypto investors, this means that the 'buy and hold' strategy requires increased selectivity, while speculative trading demands maximum caution. The coming months are likely to be a period of consolidation and stress testing, rather than the instant 'moonshot' many expect. The Fed is watching, and so should we.
