Bitcoin stays flat amid seasonal drag, as Fed rate cut hopes shift to September

The Federal Reserve left its benchmark interest rate unchanged Wednesday, matching forecasts from analysts and CME FedWatch data previously cited by The Block.

Inflation has cooled and tariff worries eased, but slower U.S. growth has stirred stagflation fears, BRN lead analyst Valentin Fournier said. At a news conference after the meeting, Fed Chair Jerome Powell expressed confidence in a “disinflationary trend,” sounding dovish, yet he pointed to solid job gains and resilient consumer spending that give policymakers room to keep rates elevated.

Markets now eye September for the earliest possible rate reduction.“With no urgency to cut rates, the Fed reiterated its ‘wait-and-see’ approach, pushing back expectations for a first cut to no earlier than September,” the BRN analyst told The Block via an emailed note. Futures traders see a 62% chance of monetary easing at the Sept. 17 FOMC session, according to the CME FedWatch tool.

Stocks and U.S. equity futures barely budged in pre-market trading a day after. Similarly, cryptocurrencies recorded muted price action. Bitcoin hovered near $105,000, while ether and XRP also traded flat, The Block’s data showed.

Fed posture boost

A hawkish backdrop could still favor bitcoin, said David Hernandez, crypto investment specialist at 21Shares. Hernandez argued that stagflationary pressure from a slowed economy and “uncomfortably high” unemployment will likely boost BTC’s demand.

“The Fed mentioned that economic uncertainty has diminished but is still very much present,” he said. “This very uncertainty enhances Bitcoin’s appeal as a hedge against potential policy errors.”

Hernandez noted that easing elsewhere could funnel liquidity into crypto, especially BTC. Earlier Thursday, the Swiss National Bank cut rates to zero. The European Central Bank has trimmed borrowing costs eight times since June 2024.

“Because it is a decentralized, borderless digital asset, Bitcoin is uniquely positioned to absorb these capital inflows, regardless of the Fed’s domestic policy stance. Ultimately, the Federal Reserve’s latest projections paint a picture of an economy under strain, facing the difficult combination of slow growth and persistent inflation. This environment naturally casts a spotlight on assets that can offer protection from these pressures,” the analyst opined.

Seasonal factors may limit near-term gains, QCP Capital warned. The trading firm cited historically muted summer volumes and a rising put-to-call premium in bitcoin options that signals cautious positioning. It also flagged month-end rebalancing and systematic deleveraging as additional headwinds for crypto prices.