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06/24 03:45

Crypto's Liquidity Outlook Darkens as Fed Hawkish

#World Cup Predictions: 100,000 USDT Daily Crypto's Liquidity Outlook Darkens as Fed Hawkish Pivot Pushes Hike Odds to 77% Warsh-Led Fed Reprices Rate Expectations as Inflation Risks Move Higher Crypto markets entered a tighter liquidity environment after the Federal Reserve held rates steady while signaling a firmer stance on inflation. Wintermute, a crypto market maker and liquidity provider, said the shift created a more challenging backdrop for digital assets reliant on sustained capital inflows. Referring to the Fed’s policy shift and its implications for capital flows into digital assets, Wintermute wrote: “For an asset class that needs liquidity arriving through ETFs, stablecoins and DATs, a Fed leaning toward tightening is the opposite of what gets those funnels flowing.” Exchange-traded funds (ETFs) channel institutional capital into crypto markets, stablecoins provide dollar-linked liquidity used for trading and settlement, and digital asset treasuries commonly refer to corporate or institutional balance sheets allocating funds to crypto. Tighter monetary policy typically raises borrowing costs and reduces risk appetite, which can slow inflows across all three channels. Federal Reserve officials, at Kevin Warsh’s first meeting as chair, removed any easing bias and shifted projections toward tighter policy. The median 2026 rate outlook rose to 3.8% from 3.4%, with nine of 18 policymakers now expecting at least one hike this year and 17 flagging upside inflation risks. Markets reacted quickly, pushing December hike odds to about 77% from roughly 24% a month earlier. Officials also shortened the policy statement to 130 words from 341, reinforcing the sharper change in tone. Brent crude fell 8.2% during the week on expectations tied to a reopening of the Strait, yet Wintermute noted that the Fed’s inflation concern appeared broader than energy. Iran Breakdown Forces Crypto to Absorb Weekend Repricing Geopolitical tensions added pressure after an Iran a

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