Anndy Lian
Global markets in limbo: The Fed’s rate decision and Bitcoin’s next move
The Federal Reserve’s latest decision to hold interest rates steady, paired with cautious remarks from Chair Jerome Powell, has cast a shadow over global risk sentiment. Meanwhile, Bitcoin teeters on the edge of a significant technical move, with traders eyeing key levels amid a backdrop of economic and geopolitical uncertainty.
On Wednesday, the Federal Open Market Committee (FOMC) voted unanimously to maintain the Fed funds rate within the range of 4.25 per cent to 4.5 per cent, a decision that aligned with market expectations. However, the real story emerged from Jerome Powell’s post-meeting press conference, where he underscored the challenges facing the central bank.
Powell pointed to tariff-driven economic uncertainty and persistent inflation risks as major hurdles complicating the Fed’s ability to ease monetary policy aggressively. His remarks suggest a central bank that is treading carefully, wary of stoking inflation further while grappling with signs of a slowing economy.
The Fed’s updated economic projections reinforced this cautious outlook. Growth forecasts for 2025 were downgraded to 1.4 per cent from 1.7 per cent in March, signalling weaker economic momentum. Inflation expectations rose to three per cent from 2.7 per cent, reflecting ongoing price pressures, while the unemployment rate is now projected to increase to 4.5 per cent from 4.4 per cent.
These figures paint a picture of an economy caught between sluggish growth and stubborn inflation, a scenario that leaves little room for bold policy shifts. This signals a Fed that’s more likely to prioritise stability over stimulus in the near term, a stance that could keep markets on edge as investors search for clearer direction.
Markets react with hesitation
The US equity markets closed Wednesday with a lack of conviction, reflecting the uncertainty sparked by the Fed’s messaging. The S&P 500 slipped by a marginal 0.035 per cent, the Dow Jones Industrial Average dropped 0.10 per cent, and the Nasdaq Composite eked out a modest gain of 0.13 per cent.
This mixed performance suggests investors are unsure how to interpret the Fed’s reluctance to pivot toward rate cuts, especially with economic growth faltering and inflation lingering above the Fed’s two per cent target. This indecision could persist, particularly with US stock and bond markets closed today for Juneteenth, leaving traders with fewer immediate catalysts to drive sentiment.
In the bond market, we observed a subtle divergence that suggests shifting expectations. The two-year US Treasury yield fell by 1 basis point to 3.941 per cent, possibly indicating that investors anticipate short-term rates will hold steady or ease slightly as growth slows.
Meanwhile, the 10-year yield edged up by 0.2 basis points to 4.391 per cent, suggesting mild concerns about longer-term inflation or economic resilience. This flattening yield curve dynamic is something I find intriguing; it could imply that the market is pricing in a prolonged period of uncertainty rather than a sharp recession or recovery.
The US Dollar Index (DXY) climbed to 98.91, extending Tuesday’s 0.8 per cent surge. The dollar’s strength likely stems from its safe-haven status amid global unease, bolstered by the Fed’s relatively hawkish tone compared to other central banks. Gold, however, bucked its usual role as a safe-haven asset, falling 0.6 per cent to US$3,369 per ounce. I suspect the stronger dollar played a role here, as it often exerts downward pressure on gold prices.
On the flip side, Brent crude oil rose 0.3 per cent to US$76.70 per barrel, a move that could reflect supply-side worries or geopolitical tensions rather than robust demand. These commodity movements highlight how currency dynamics and external factors are currently overshadowing traditional risk-on/risk-off patterns.
A global patchwork of central bank responses
While the Fed holds its ground, other central banks are charting their own courses, reflecting the diverse economic pressures at play globally. The Bank of England (BOE) is expected to maintain its interest rate at 4.25 per cent today, a decision that aligns with the Fed’s cautious approach as the UK balances inflation and growth concerns.
In contrast, a Bloomberg survey suggests the Swiss National Bank (SNB) is poised to cut its policy rate by 25 basis points to 0.0 per cent, a move that would underscore Switzerland’s ongoing struggle with deflationary pressures and a strong franc. This is a pragmatic step, though it risks further weakening the SNB’s already limited policy toolkit.
In Asia, the Philippines’ Bangko Sentral ng Pilipinas (BSP) is anticipated to lower its target reverse repurchase rate by 25 basis points, signaling a shift toward supporting growth amid softening economic conditions. Taiwan’s Central Bank (CBC), however, is expected to hold its benchmark rate steady, opting for stability in a region where trade and tech sectors remain critical drivers. These varied responses fascinate me—they illustrate how interconnected yet distinct the global economy is, with each central bank tailoring its strategy to local realities while keeping an eye on the Fed’s lead.
Asian equity indices opened lower today, tracking the uneven cues from Wall Street and the Fed’s outlook. This softness aligns with my sense that risk sentiment is retreating globally, as investors weigh the combined impact of slower growth, sticky inflation, and policy uncertainty. It’s a reminder that no market operates in isolation; what happens in Washington reverberates across continents.
Bitcoin’s technical tightrope
Against this macroeconomic backdrop, Bitcoin is capturing attention as it navigates a precarious technical setup. Trading near US$104,773, the cryptocurrency is squeezed between a rising trendline and a descending 50-period exponential moving average (EMA) at US$105,529. This triangle pattern, often a sign of impending volatility, is underscored by recent price action: three consecutive candles with lower wicks have defended support around US$104,000, demonstrating buyer resilience; yet, the 50-period EMA caps any upward push.
The Moving Average Convergence Divergence (MACD) indicator is flattening, hinting at the possibility of a bullish crossover—a development that could spark upward momentum. A close above US$105,530 would be the bullish trigger, potentially driving Bitcoin toward US$106,650 and US$107,750.
Conversely, a break below US$103,500 would tilt the outlook bearish, with support levels at US$102,180 and US$100,450 coming into focus. Currently, the price prediction leans bearish due to mixed catalysts; however, I believe the market’s next move hinges on whether volume and momentum confirm a breakout or breakdown.
What strikes me about Bitcoin here is its dual nature—it’s both a speculative asset tied to risk sentiment and a potential hedge against economic turmoil. If global markets falter under the weight of the Fed’s caution and geopolitical risks, Bitcoin could face selling pressure alongside equities.
Yet, its historical resilience and appeal as an inflation hedge might draw buyers if traditional assets lose ground. I’m inclined to watch US$104,000 as a pivotal level for now; holding above it keeps the bullish case alive, while a drop below US$103,500 could signal a deeper pullback.
Options market signals caution
The Bitcoin options market offers another layer of insight, revealing a pronounced tilt toward downside protection. On Deribit, the put-to-call volume ratio spiked to 2.17 over the past 24 hours, reflecting heavy demand for put options—contracts that allow holders to sell at a set price, effectively insuring against declines.
For options expiring June 20, open interest in puts struck at US$100,000 now dominates, with a put-to-call ratio of 1.16. This surge in protective bets suggests traders are bracing for a potential drop to that US$100,000 level, driven perhaps by geopolitical jitters or broader economic fears.
I find this options activity telling. It’s not outright panic—call options are still in play—but it shows a market on guard, with participants unwilling to bet big on upside without clearer signals. In my view, this hedging reflects the same uncertainty rippling through equities and bonds: no one’s quite sure where the next shoe will drop, so they’re preparing for the worst while hoping for the best.
My take on the bigger picture
Stepping back, I see a global market landscape defined by hesitation and complexity. The Fed’s decision to hold rates steady, paired with Powell’s guarded comments, sets a tone of restraint that’s reverberating worldwide.
Weaker growth, higher inflation, and rising unemployment form a challenging trifecta that limits the Fed’s room to maneuver, and I suspect this will keep volatility elevated as markets seek clarity. The mixed signals from stocks, bonds, and commodities only deepen the ambiguity—investors seem caught between fear of a slowdown and faint hope for a soft landing.
For Bitcoin, the technical setup and options sentiment suggest a market at a tipping point. I lean slightly bearish in the short term, given the weight of global risks and the lack of a strong bullish catalyst. A break below US$103,500 wouldn’t surprise me, especially if equity markets stumble further.
That said, Bitcoin’s ability to decouple from traditional assets during times of crisis keeps me open to an upside surprise if it clears US$105,530 with conviction. Either way, I’d urge traders to stay nimble and closely monitor volume. Confirmation will be key.
Ultimately, this feels like a moment for patience rather than bold bets. The Fed’s caution, global policy divergence, and Bitcoin’s technical tension all point to a period of flux. For investors, staying informed and flexible will be critical as we navigate this uncertain terrain. Whether it’s a breakout or a breakdown, the next few days could set the tone for markets well beyond June.
Source: https://e27.co/global-markets-in-limbo-the-feds-rate-decision-and-bitcoins-next-move-20250619/
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