Bitcoin and cryptocurrency markets experienced slight losses following the release of the minutes from the Fed’s May 6-7 Federal Open Market Committee (FOMC) meeting.
The hawkish statements in the minutes limited investors’ short-term risk appetite.
Fed officials said that “tough policy choices” could be on the table due to the risks of persistent inflation and a looming recession. “Participants agreed that uncertainty about the economic outlook has increased and decided that a cautious approach would be appropriate until the clear economic impacts of changes in government policies become more apparent,” the minutes said.
Despite this, BRN analysts said institutional demand remained strong. Spot Bitcoin ETFs in the US have recorded net inflows for the 10th consecutive day, with BlackRock making the biggest contribution. BRN analyst Valentine Fournier noted that many companies have announced plans to add BTC to their portfolios as a reserve asset.
“Bitcoin continues to benefit from its positioning as a hedge and long-term asset. Institutional adoption is strong and more firms are building BTC reserves,” BRN analysts said, noting that the rally could pick up speed again once profit-taking is over.
Another important development that investors are focusing on is the Personal Consumption Expenditures (PCE) report, the Fed’s most important inflation indicator. The data, which will be released on Friday, is of critical importance for the markets.
According to CoinPanel senior automation expert Dr. Kirill Kretov, a lower-than-expected data could increase the likelihood of a rate cut by the Fed, easing inflation concerns. However, he noted that higher data could trigger a risk-off mode. “The liquidity structure in crypto markets is still fragile, so we could see extreme price movements even if the data beats or falls short of expectations by just 0.1%,” he said.
*This is not investment advice.
