tl;dr
Hawkish remarks from the Federal Open Market Committee's July meeting have paused the recent modest cryptocurrency rally. The Fed expressed greater concern over inflation risks than employment issues, citing tariffs and inflation expectations as key factors. Bitcoin and Ethereum gains were reduced f...
Hawkish remarks from the Federal Open Market Committee's late July meeting have temporarily halted the cryptocurrency market's modest rally seen on Wednesday. According to the Fed minutes, most participants viewed the upside risk to inflation as more significant than employment concerns. They highlighted uncertain effects of tariffs and the risk of inflation expectations becoming unanchored as key factors.
Bitcoin, after initially gaining 0.7%, slipped to just above its previous level, trading near $113,300 in the last 24 hours. Ethereum, which had one of the best performances among major cryptocurrencies with a 4.5% gain, pared back to a 2.3% advance at $4,270. These observations occurred before the August 1 employment report, which revealed a slower job gain for July and a substantial 258,000 job downward revision for June and May.
Had the Fed had access to this revised employment data prior to the July meeting, the committee's outlook could have dramatically changed, potentially even resulting in a rate cut decision. Despite this, the focal point for investors remains Fed Chairman Jerome Powell's upcoming keynote at the Kansas City Fed's Economic Symposium in Jackson Hole.
Historically, Jackson Hole speeches have served as platforms for announcing significant policy shifts. Market watchers are eager to see if Powell, known for his hawkish tone, will signal any inclination towards a rate cut in the September meeting. The general consensus suggests Powell will adopt a cautious "wait and see" approach, emphasizing that several critical economic reports—particularly on employment and inflation—are scheduled between now and September.