As is known, the FED held its first Federal Open Market Committee (FOMC) meeting under the chairmanship of Kevin Warsh last week and did not change interest rates. The FED unanimously kept the policy interest rate stable at 3.50-3.75 percent, in line with expectations.
Increased inflation concerns stemming from the US-Iran conflict have reduced the likelihood of a Fed interest rate cut to almost zero, while increasing the likelihood of an interest rate hike.
While the general consensus is that the Fed will keep interest rates stable this year, Grayscale suggests that a postponement of the Fed’s interest rate hike could lead to a rise in BTC.
Grayscale research head Zach Pandl suggests that Bitcoin could rise if the Federal Reserve postpones the possibility of an interest rate hike. In other words, according to Pandl, Bitcoin is waiting for the Fed to keep interest rates unchanged before it can rise.
Pandl noted that since the conflict in Iran began in late February, US stocks have risen by 9%, but BTC has fallen by 1% and gold by 20%.
Pandl explained that the relatively low performance of BTC and gold stems from the market pricing in the possibility of a Fed interest rate hike.
At this point, according to Pandl, Bitcoin has lagged behind US stocks due to concerns that the Fed may raise interest rates again, but if the rate hike does not occur, BTC could close this gap.
He stated that if the likelihood of interest rate hikes decreases, BTC has a high chance of reaching stock market returns.
Pandl also added that Grayscale’s base scenario is that the Fed will postpone any interest rate hikes. He further described BTC as both a scarce digital asset serving as a long-term store of value and an investment vehicle for the growth of the cryptocurrency sector.
