Bitcoin’s Fed cut trade flips as bond market turns into the risk
Bloomberg reported on May 22 that bond traders are fully pricing in a Fed interest rate hike by year-end, with interest rate swaps implying the Fed's benchmark rate at least 25 basis points higher by the end of 2026. The same day, Fed Governor Christopher Waller said the Fed should remove its easing bias and […] The post Bitcoin’s Fed cut trade flips as bond...
Key takeaways
- 1Bond traders fully priced in Fed rate hike of 25 basis points by end of 2026.
- 2Fed Governor Christopher Waller urged the Fed to remove its easing bias immediately.
- 3Bitcoin's Fed rate cut trade narrative is flipping as bond market signals tightening ahead.
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Why it matters
Higher interest rates reduce Bitcoin's appeal as an inflation hedge and increase opportunity cost of holding non-yielding assets, pressuring crypto valuations. Indian investors holding Bitcoin as a hedge against rupee depreciation must reassess if rising global rates change the macro backdrop.
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