Foreign media commentators believe that while newly appointed Federal Reserve Chairman Kevin Warsh maintained interest rates during his first policy meeting, what truly changed market expectations was the policy path. Previously, the market had bet on rate cuts and improved liquidity in the second half of 2026; this premise has now been clearly shaken, leading to a decline in crypto assets.
The shift in raster graphics is attracting more attention.
The article mentions that the June 17 meeting kept the federal funds rate at 3.50% to 3.75%, marking the fourth consecutive time it remained unchanged, a result largely in line with expectations. What truly triggered the market correction was the change in the dot plot in the latest summary of economic projections: Federal Reserve officials' assessment of the interest rate trend in 2026 has shifted from favoring rate cuts in March to favoring maintaining high rates or even further increases.
According to the article, in March, no officials projected a rate hike in 2026, and the committee's overall assessment still leaned towards rate cuts. However, after the first Warsh meeting, 9 out of 18 officials projected at least one rate hike in 2026, with 6 projecting two hikes and only 1 still projecting a rate cut. The median interest rate forecast by the end of 2026 also rose from 3.4% in March to 3.8%.
Bitcoin's pullback reflects anticipated repricing
The article argues that the market's reaction to this meeting was not due to changes in current interest rates, but rather to a rewriting of the future interest rate path. For risky assets, prices often reflect future funding costs, not just current interest rates. Previously, part of the crypto market's upward momentum was based on the expectation of a more accommodative monetary environment later in the year; now that expectation has been weakened, asset valuations need to be readjusted.
The report noted that after the announcement, most major cryptocurrencies fell by 1% to 3%, with Bitcoin briefly approaching $64,000. The article interprets this pullback as "expectation repricing," rather than a direct reaction to maintaining the interest rate unchanged.
High interest rate environment suppresses risk appetite
In the author's view, if the Federal Reserve no longer signals clear interest rate cuts and its policy statements place greater emphasis on restoring price stability, the market will find it difficult to maintain its previous pricing in of an easing cycle. Weaker forward guidance will also make it harder for traders to reach a consensus on the future path, thus amplifying volatility.
The article argues that a hawkish Federal Reserve will suppress the crypto market through several channels. First, liquidity. High or rising interest rates mean higher funding costs, typically reducing the flow of funds to highly volatile assets. Second, opportunity cost. If low-risk assets like short-term US Treasury bonds offer higher returns, holding Bitcoin, which doesn't generate cash flow, becomes less attractive.
The author also notes that a stronger dollar and higher real yields are generally unfavorable for dollar-denominated crypto assets. Meanwhile, the market narrative is shifting. If "interest rate cuts" are no longer the core condition supporting the 2026 market, the crypto market will need to find new drivers.
The article concludes by pointing out that the next more important variable to watch is inflation data. If inflation fails to fall back down, the Federal Reserve may maintain its tight stance for an extended period, which will continue to put pressure on the cryptocurrency market.
