Daily News 19

Tag: FOMC

  • Bitcoin Absorbs Fed Rate Hike as Officials Anticipate Further Tightening

    Bitcoin Absorbs Fed Rate Hike as Officials Anticipate Further Tightening

    Bitcoin maintained its position near pre-announcement levels around $76,000 on Wednesday, showing minimal immediate reaction to the U.S. Federal Reserve’s decision to raise its benchmark interest rate for the first time since 2023.

    Fed Raises Rates by 25 Basis Points

    The Federal Open Market Committee voted unanimously to increase rates by 25 basis points, setting a new target range of 3.75% to 4%. This move, typically associated with pressure on stocks and risk assets, came as the central bank continues to address persistently high inflation.

    At the time of writing, Bitcoin was trading at $76,663, representing a 1.35% gain over the previous 24 hours.

    Market Reaction Largely Anticipated

    Cooper Duschang, research analyst at Talos, noted in comments shared with Cointelegraph:

    “The initial reaction suggests the Fed’s decision was largely anticipated by crypto markets. Bitcoin has remained relatively resilient, holding broadly around pre-announcement levels even as equities moved lower.”

    Equities Decline While Bitcoin Holds

    U.S. stocks slipped on Wednesday following the rate decision. Crypto analysts caution that Bitcoin’s current resilience could face fresh tests if the Fed implements additional rate hikes before year-end.

    During the FOMC press conference, Fed Chair Kevin Warsh stated that inflation remains too high while the U.S. economy shows signs of strengthening. Updated economic projections indicate a majority of officials anticipate at least one more rate increase before the end of the year.

    16 out of 18 FOMC participants expected another rate increase this year. Source: US Federal Reserve

    Andrew Melville, head of research at Block Scholes, characterized a potential additional increase as a “more hawkish surprise than today’s 25bp hike.”

    Derivatives and Spot Markets Show Divergence

    While Bitcoin’s spot price remained stable, Duschang highlighted significant activity beneath the surface:

    “Perpetual futures have shifted towards net selling, led by approximately $82 million in Bitcoin and $68 million in Ether over the past hour. In contrast, Bitcoin recorded around $15.5 million of net spot buying, suggesting spot demand is absorbing some of the selling pressure coming through derivatives.”

    Duschang also pointed to notable exchange flows, with approximately 2,170 Bitcoin moving onto exchanges following the rate announcement, followed by a withdrawal of 1,260 Bitcoin.

    “Rather than a uniform risk-off response, investors appear to be actively repositioning as they digest the Fed’s message. The key question now is whether Bitcoin’s resilience and spot demand hold as attention shifts from today’s widely anticipated hike to the prospect of further tightening.”

    Analysts Warn of Repricing Risk

    Martin Lee, market insights lead at DWF Labs, warned that the Fed’s renewed “hawkish stance” of “higher for longer” rates would lead to risk-on assets “repricing this new reality.”

    Related: Bitcoin awaits Fed rate decision below $76K as analysis discounts ‘dovish surprise’ odds

    Magazine: HYPE price could suffer as Binance takes its revenue: Alice Liu

  • Gold Draws $500B Amid Rising Yields, Threatening Bitcoin’s Dominance

    Gold Draws $500B Amid Rising Yields, Threatening Bitcoin’s Dominance

    Gold Defies Rising Yields as Central Bank Demand Reshapes Market Dynamics

    While precious metals show bearish technical signals on the charts, fundamental data reveals a striking divergence: gold has risen nearly 15% since late June even as the 10-year U.S. Treasury yield jumped almost 20% over the same period. This breakdown of the traditional inverse relationship between gold and yields suggests structural demand shifts are overriding rate sensitivity.

    Central Banks Drive Gold’s Yield Insensitivity

    According to TradingEconomics data, the 10-year Treasury yield surged approximately 20% from late June through the current quarter. Historically, such a move would pressure gold lower. Instead, gold advanced nearly 15% during the same window.

    The primary catalyst appears to be sustained central bank purchasing, which has weakened gold’s typical correlation with monetary policy expectations. Analysts observe that this institutional demand floor is “shifting the precious metal’s yield-sensitive dynamics and providing support to the metal despite high yields.”

    Record ETF Inflows Signal Persistent Appetite

    Chinese gold ETFs added 11 tonnes in August, marking the second consecutive monthly increase and bringing total holdings to 293 tonnes—the highest level since April and the third-highest on record. Year-to-date, these funds have accumulated 45 tonnes, with early September data indicating continued buying as domestic yields decline and equities weaken.

    Broader positioning data suggests over $500 billion has flowed into gold and silver combined, raising questions about whether metals are attracting fresh capital or diverting it from risk assets such as equities and cryptocurrencies.

    FOMC Positioning and Crypto Implications

    With the Federal Open Market Committee meeting approaching, investors appear to be using gold as a strategic hedge against potential Fed-driven yield volatility rather than a tactical trade. The metal’s resilience contrasts with Bitcoin’s 30% quarterly return, which has captured much of the safe-haven narrative in recent months.

    If yields remain elevated while the dollar weakens, analysts suggest gold could continue drawing capital, potentially creating additional headwinds for risk assets including crypto.

    Key Takeaways

    • Gold has decoupled from rising Treasury yields, gaining ~15% while the 10-year yield rose ~20% since late June.
    • Central bank demand is the primary structural driver, reducing gold’s rate sensitivity.
    • Chinese gold ETFs hold 293 tonnes, a near-record high, with 45 tonnes added year-to-date.
    • Over $500 billion has reportedly entered gold and silver markets.
    • Sustained gold strength could pressure risk assets, including cryptocurrencies, ahead of the FOMC decision.