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Fed Holds Rates as Geopolitical Uncertainty Clouds Crypto Outlook

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Crypto Breaking News

The Federal Reserve’s Open Market Committee kept the federal funds target range unchanged at 3.5% to 3.75, signaling a wait-and-see stance as policymakers weigh the evolving macro backdrop and the geopolitical shock stemming from the Middle East. The decision preserves a restrictive stance while the central bank monitors inflation pressures and the economy’s ability to weather external shocks.

Fed Chair Jerome Powell framed the economy as performing well in broad terms — consumer spending staying resilient and business investment continuing to expand — but he warned that weaknesses linger in the housing market and the labor market shows signs of softening. Inflation, meanwhile, remains “somewhat elevated” relative to the 2% target, complicating the Fed’s path back to price stability.

The implications of events in the Middle East for the US economy are uncertain in the near term. Higher energy prices will push up overall inflation, but it is too soon to know the scope and duration of the potential effects on the economy.

The posture underscores a difficult balancing act: the Fed must pursue maximum employment while keeping inflation anchored, all in a context where the war’s economic spillovers could push energy costs higher and alter demand dynamics. Powell’s remarks suggest policymakers view the near-term outlook as uncertain, with energy price trajectories among the wild cards that will shape policy in the months ahead.

Key takeaways

  • Policy remains unchanged at 3.5% to 3.75%, with inflation lingering above the 2% goal and housing weakness alongside signs of labor-market cooling.
  • Geopolitical tensions add energy-price risk, injecting additional uncertainty into the inflation path and the policy outlook.
  • Markets broadly price in little near-term relief from rate cuts; CME data shows a 97% probability of no change at the next year-ahead horizon, with a small 3% chance of a 25-basis-point hike by April 2026 that would lift the range to 3.75%–4.00%.
  • Industry commentary frames the gap between policy and liquidity flows: some observers expect potential easing if geopolitical strains intensify, while others see a gradual expansion of money supply lifting asset prices over time.

Policy stance amid a cloud of uncertainty

With inflation still stubbornly above target and a housing sector that has not fully recovered, the Fed’s decision to hold rates steady reinforces a cautious, data-driven posture. Powell emphasized that the economy’s breadth — including resilient consumer demand and ongoing investment — supports a patient approach to policy normalization. Yet he also acknowledged that the energy-price channel could complicate the inflation outlook if tensions in the Middle East persist or escalate.

The central bank’s balance between supporting employment and curbing inflation remains the defining tension of the moment. The war adds a layer of risk that policy makers must weigh against the need to avoid overtightening in an environment where consumer confidence and business sentiment can swing with energy headlines. In this context, the Fed’s forward guidance will be scrutinized for any signal about the pace and sequencing of future policy moves as new data arrive.

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Market path and crypto implications

Traders have largely priced in a stationary policy path in the near term, with a long horizon view depending on how inflation evolves and how geopolitical risks unfold. Data from the Chicago Mercantile Exchange’s FedWatch tool indicated a dominant expectation for no near-term changes, reinforcing a narrative of policy steadiness in the face of uncertainty. The odds of a rate hike at the next specified horizon sit at a slim margin, while the probability of any cuts remains uncertain for the medium term.

Analysts have offered a spectrum of views on how policy could adapt if geopolitical tensions permanently alter the risk landscape. Some market observers, including Arthur Hayes, co-founder of BitMEX, have signaled a preference for lower rates before resuming bullish bets on bitcoin and other crypto assets. He has argued that a rate cut could bolster risk-taking and liquidity, potentially supporting crypto markets as capital seeks higher-yield opportunities.

On the other side of the debate, macro strategist Lyn Alden has described a scenario in which the Fed’s policy stance represents a gradual, ongoing expansion of monetary liquidity. In such a regime, asset prices, including digital assets, could receive support over time even without aggressive rate cuts, provided inflation remains contained and financial conditions remain accommodative enough to sustain broad-based investment activity.

For crypto investors and builders, the Fed’s decision underscores how sensitive risk assets remain to the direction of liquidity and the macro narrative around inflation and growth. A steady policy stance can reduce the impulsive volatility that often accompanies surprise shifts in rate expectations, but the ultimate crypto implication will hinge on how long inflation stays above target, how the labor market evolves, and how energy-price dynamics respond to geopolitical developments.

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Beyond the immediate policy path, the relationship between Fed signals and risk assets suggests traders will monitor several ping points: incoming inflation prints, employment data, housing metrics, and evolving energy prices tied to Middle East developments. The crypto market’s sensitivity to liquidity conditions means any durable shift in the rate outlook could quickly reweight risk appetite across tokens, with capital potentially rotating between traditional risk assets and digital instruments tied to alternative financial rails.

As the central bank maintains a calibrated stance, investors should watch how policymakers view the trajectory of inflation in the wake of heightened geopolitical risk. A credible path back toward the 2% target—if energy-price pressures subside or are absorbed without a prolonged disruption—could reopen room for rate normalization. Conversely, persistent or rising inflation would keep policy more restrictive, with potential knock-on effects for both equities and crypto markets.

Looking ahead, the next round of economic data and any fresh guidance from policymakers will be pivotal. If energy prices stabilize and inflation moves closer to target, markets could begin pricing in a more confident glide path, potentially supporting broader risk-taking, including crypto ecosystems that rely on liquidity and favorable financing conditions.

In the meantime, traders and builders in the crypto space should remain attentive to shifts in liquidity and macro narrative. While the Fed’s decision to hold rates steadies some near-term risk, the ongoing Middle East situation remains a critical wildcard that could redefine the pace of policy normalization and, by extension, the appetite for risk across asset classes.

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What comes next will hinge on incoming data, the resilience of consumer demand, and how energy markets absorb geopolitical developments. As investors recalibrate, the crypto sector will likely respond to evolving liquidity conditions and the broader assessment of risk appetite in a world where policy and geopolitics remain tightly interwoven.

Risk & affiliate notice: Crypto assets are volatile and capital is at risk. This article may contain affiliate links. Read full disclosure

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Top Ethereum Price Predictions as ETH’s Price Soars 8% Weekly

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Spot ETH ETFs


Is ETH heading toward new local peaks or will the bears regain control?

The second-largest cryptocurrency has performed quite well over the past seven days, increasing its valuation by double digits despite its Wednesday correction.

According to numerous analysts, the uptrend could continue in the short term, with some envisioning an astonishing increase toward a new all-time high.

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The Rally Goes on?

Earlier this week, ETH soared to almost $2,400, or its highest point since the start of February. Currently, it trades at around $2,200, up 8% on a weekly basis.

The renewed upswing caught the eye of many industry participants who believe the valuation has yet to reach fresh local tops. X user Galaxy set $2,400 and $2,600 as the next potential targets, while Trader Tardigrade envisioned a pump to as high as $2,670.

Ted, who often discusses ETH’s performance, chipped in as well. He thinks the price could hit the $2,400 resistance zone, but that might be a “fakeout” and be followed by a substantial decline.

Meanwhile, several on-chain factors support the bullish scenario. The US spot ETH ETFs have been flashing green over the past six days, meaning inflows have dominated outflows. This reflects rising interest among institutional investors in gaining exposure to the asset and could positively impact future price performance.

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Spot ETH ETFs
Spot ETH ETFs, Source: SoSoValue

Next on the list is the amount of ETH sitting on crypto exchanges. Earlier this week, the figure fell to a nearly 10-year low of around 15.85 million coins. This trend signals that investors continue to shift their holdings toward self-custody methods, thus lowering the immediate selling pressure.

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ETH Exchange Reserve
ETH Exchange Reserve, Source: CryptoQuant

Ethereum’s Relative Strength Index (RSI) should also be mentioned. The technical analysis tool, which measures the speed and magnitude of recent price changes, tumbled to 22. This means the asset has entered oversold territory and could be gearing up for a rally.

ETH RSIETH RSI
ETH RSI, Source: RSI Hunter

The Moon Scenarios

According to other analysts, ETH might be on the verge of a much more substantial increase that can take it to uncharted territory. X user ray claimed that $10,000 is “not a dream, just a milestone.”

A few days ago, the renowned investor and one who successfully predicted the 2008 financial collapse, Robert Kiyosaki, sounded the alarm that major banks and institutions are in trouble, hinting that another crash could be on the way.

Later on, he forecasted that “the biggest bubble” is about to burst, foreseeing that once the meltdown is over, BTC, ETH, gold, and silver will emerge as the major winners. As for the second-largest cryptocurrency, he envisioned its price skyrocketing to a (for now) almost unbelievable $95,000 within a year after the catastrophe.

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Lummis says CLARITY Act must pass this year as Senate eyes April markup

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Lummis says CLARITY Act must pass this year as Senate eyes April markup

Sen. Cynthia Lummis says the Digital Asset Market CLARITY Act “must be completed by the end of the year,” with Republicans planning a late‑April Banking Committee markup after months of delay.

Summary

  • Lummis told colleagues the CLARITY Act “must be completed by the end of the year,” and said Republican members of Senate Banking aim to start markup in late April after Easter.​
  • The bill would split oversight of “digital commodities” and securities between the CFTC and SEC, set rules for exchanges and issuers, and plug gaps left by the 2025 GENIUS Act stablecoin law.
  • A dispute over banning passive stablecoin yield had stalled progress and even cost Coinbase’s support, but Lummis now says compromises on yield and DeFi language are “largely reached,” putting pressure on Washington to finish the job in a crowded 2026 calendar.

Senator Cynthia Lummis (R-WY) delivered her clearest deadline yet for the Digital Asset Market Clarity Act on Wednesday, declaring during discussions reported by crypto journalist Eleanor Terrett that the landmark cryptocurrency market structure bill “must be completed by the end of the year” — regardless of the obstacles that have repeatedly delayed its progress. Lummis also revealed that the Republican side of the Senate Banking Committee is planning to initiate the bill’s markup process in late April, after the Easter holiday recess.

The remarks represent a significant hardening of Lummis’s posture on the CLARITY Act — formally the Digital Asset Market Clarity Act — which has been the most consequential piece of pending crypto legislation in Congress since the passage of the GENIUS Act stablecoin law in July 2025. Lummis, who chairs the Senate Subcommittee on Digital Assets, has been the bill’s most prominent champion, framing it as essential to U.S. leadership in digital finance and arguing that it would establish regulatory protections that future administrations could not easily reverse.

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The CLARITY Act seeks to resolve the long-running jurisdictional dispute between the Securities and Exchange Commission and the Commodity Futures Trading Commission over digital assets, assigning the CFTC primary oversight authority over digital commodities while preserving SEC authority over tokens classified as securities. It also sets registration and disclosure requirements for crypto trading platforms and token issuers. The House passed its version of the bill in 2025, but the Senate has advanced a narrower iteration that imposes stricter customer-protection requirements and limits regulatory discretion — setting up a “high-stakes negotiation” between the two chambers over the final text.

The thorniest unresolved issue has been stablecoin yield. An earlier draft of the Senate’s CLARITY Act included language prohibiting stablecoin issuers from paying interest or yield solely for holding a stablecoin balance — a provision designed to prevent payment stablecoins from competing directly with insured bank deposits. The clause would permit activity-based rewards tied to real usage — such as payments, liquidity provision, staking, or network governance participation — but bar passive yield simply for custody. Coinbase cited these provisions as grounds for withdrawing its support for the bill, while banking groups backed the restrictions.

Wednesday’s statement from Lummis offered the most encouraging signal yet that this impasse is breaking. She said a solution on the stablecoin yield question “has been largely reached,” and added that disputes over DeFi-related provisions have also “been properly addressed”. Sources familiar with the negotiations had previously described talks between legislators and industry as moving “in the right direction,” with Digital Chamber CEO Cody Carbone expressing optimism about securing an affirmative vote.

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The late-April markup timeline is more concrete than any previously announced. Earlier in the year, the Banking Committee had scheduled a markup for January only to pull it the day before, after Lummis acknowledged that the bill needed further agreement — particularly around the concerns of banks and credit unions worried about stablecoin-driven deposit outflows. The delay prompted open frustration from Lummis, who had urged Democratic colleagues not to retreat from months of bipartisan progress.

With the GENIUS Act already signed into law and its implementing regulations now under OCC review, the CLARITY Act represents the remaining pillar of what the industry has long called a comprehensive U.S. digital asset regulatory framework. Lummis has set a year-end deadline. Whether Washington can hold to it — in a legislative calendar already crowded by geopolitical crises and a contentious Fed cycle — will determine whether 2026 becomes the year crypto finally gets its rules.

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can Pi escape its range in 2026?

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Pi has morphed from a hyped IOU into a battered $0.18 L1; 2026’s open mainnet will decide whether it earns real usage or just fuels another round of unlocked sell pressure.

Pi Network (PI) has moved from a hyped IOU narrative to a battered, liquid L1 asset trading around the mid‑$0.17–$0.18 range, with its next leg entirely dependent on whether the 2026 open mainnet phase actually delivers real usage instead of just unlocked sell pressure. Treat it like any other high‑beta alt: structurally cheap on optics, structurally dangerous on tokenomics and execution risk.

From IOU hype to $0.18 L1: can Pi escape its range in 2026? - 1

Where Pi Trades Now

Pi sits near $0.18 with a market cap around $1.7–1.8 billion, down sharply from its speculative IOU blow‑off in 2022 when prices briefly printed triple‑digit wicks on thin order books. Recent price action tells you everything: the token rallied roughly 80–90% into late February–mid March 2026 toward $0.30, then faded back toward $0.20 as momentum stalled and RSI divergences flashed. Unlocks are biting – the token has logged several sessions near its all‑time low area as supply from long‑time “miners” meets underwhelming demand on centralized venues. Liquidity is decent but not deep enough to absorb aggressive distribution from a 10‑figure fully diluted supply without persistent slippage.

What Actually Changes In 2026

The core fundamental catalyst is the move toward an “open mainnet” with real transactions, dApps and stricter KYC/security, after years of closed‑ecosystem promises. The team is rolling out enhanced verification (KYC, palm‑print, AI checks) and has cleared roughly 2.5 million users for migration, crucial to get coins off the grey zone and into a compliant, transferable state. A broader 2026 roadmap ties this to supporting real‑world finance integrations and payments, but so far the market has treated each technical milestone (like the Pi Launchpad testnet) as a sell‑the‑news event rather than a re‑rating trigger.

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Price Scenarios: 2026–2030

External models cluster Pi’s fair‑value band for the next few years somewhere between “modest grind” and “permanent underperformance.” Gate.io’s internal work sees an average near $0.20 for 2026, with a rough range between about $0.16 and $0.27 – effectively where it is already trading. Other forecasters project that, if the ecosystem scales and listings proliferate, Pi could grind into the low single digits by 2030, with some estimates around $2.50–$3.50 under constructive conditions. Those paths assume three things that are not yet proven: successful open mainnet, sustained user activity beyond mining, and a crypto macro environment that rewards L1 risk instead of choking it.

Verdict: Trade The Range, Don’t Worship The Narrative

For now, Pi looks like a liquid, range‑bound beta play rather than a structural compounder. Bulls get a clear technical invalidation: hold above the mid‑$0.17 pivot and reclaim the $0.23–$0.25 resistance band, and the market can start repricing toward the psychological $0.30–$0.40 area on any mainnet or listing surprise. Bears lean on the opposite logic: continued unlocks plus weak on‑chain usage send Pi into a slow bleed, with each rally sold by early miners finally getting exit liquidity. In this tape, smart money treats Pi as an event‑driven trade around roadmap milestones and macro risk cycles, not as a religion – position small, respect liquidity, and assume volatility is the rule, not the exception.

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Special DeepSnitch AI Bonus Code: Limited Time Left To Reserve 300% Extra Tokens Ahead of Launch, Bears Lose Grip On ZEC and DOGE

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Bitcoin just hit a six-week high, which somewhat restored the sentiment in the market. Yet, exchange inflows spiked to 6.1K BTC in a single hour. This could indicate that the rally is real, but selling pressure may be reaching a boiling point.

As fears of an extra wave of volatility become real, the special DeepSnitch AI bonus code presents the easiest way for traders to boost their chances of massive returns.

With launch slated for March 31, DeepSnitch AI’s crypto presale bonus offer provides as many as 300% extra tokens for large allocations. Since these codes expire at launch, the level of FOMO in the community is getting borderline ridiculous as traders keep adding to their allocations.

Is BTC selling pressure building?

According to Julio Moreno of CryptoQuant, hourly Bitcoin inflows into centralized exchanges exploded to 6.1K BTC on March 16. This is the highest reading since February 20, with large inflows accounting to 63% of the total figure.

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The driving force behind the inflows was Bitcoin’s 12% gradual rally in March.

Traders generally send BTC to exchanges before they sell or convert it into stablecoins, with Moreno noting that such spikes often preceded an uptick in selling pressure.

Thus, traders fear that smart money may be using the rally as an opportunity to profit. This uncertainty only contributed to traders doubling down on the special DeepSnitch AI bonus code, intending to scoop up extra tokens ahead of the March 31 launch.

Best March opportunities in crypto

1. DeepSnitch AI: How much are early investor bonus tokens worth?

Blink, and you’ll miss it. DeepSnitch AI is a project rapidly closing in on its March 31 launch. While this is enough to push FOMO to the max, the special DeepSnitch AI bonus code basically led to the project getting in on many trending lists.

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So far, DeepSnitch AI has raised $2.2M at $0.04487. The main offering is an analytics platform consisting of five autonomous AI agents that can do everything from discovering rugs and honeypots, DYOR, token analysis, to real-time sentiment and FUD tracking.

The latest bonuses only enhanced these fundamentals. You can apply any presale discount code at checkout if you meet the right allocation amount. Fortunately, there are multiple tiers, meaning that there’s a special DeepSnitch AI bonus code for everyone.

The lowest one, DSNTVIP30, gets you 30% extra tokens on $2K and above. DSNTVIP50 bumps that to 50% on $5K or more, and DSNTVIP150 adds 150% to your bag for $10K and up. And the biggest presale discount code, DSNTVIP300, unlocks 300% extra on allocations of $30K and above, which works out to roughly $90K.

DeepSnitch AI is running hot. With 41.7 million DSNT already staked, community projections of 100x to 300x make it one of the largest opportunities in recent times.

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All codes expire on March 31.

2. Dogecoin: DOGE breaking out?

According to CoinMarketCap, DOGE traded at $0.099 on March 18.

As the community went crazy over the special DeepSnitch AI bonus code, bears surrendered control over DOGE’s price action.

In the short-term, Dogecoin must close above $0.10 (50-day SMA) to open the test of the $0.12 breakdown level, where sellers are expected to start dumping.

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A sharp rejection here sets up a range between $0.09 and $0.12 for the near term. While the chances of DOGE hovering in this range are likely, if the OG meme coin closes above $0.12, the entire script will flip, and Dogecoin could end up surging to $0.16.

3. Zcash: Will the ZEC rally continue?

ZEC pushed to $276 on March 18, sparking hopes of the privacy coin’s grand re-entry, according to CoinMarketCap.

In the short term, the $278 level is the key battleground. Holding above it keeps the short-term structure intact, allowing buyers to kickstart another attempt at $286, but a clean break below $278 shifts the advantage back to sellers and opens the path to $272 first.

If ZEC continues sliding down, it could go as low as $265 or $258.

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Final words: Boost your bags

Selling pressure could return in an instant, and that’s exactly why DeepSnitch AI has been making rounds lately.

With a launch set at exactly the right time, affordable pricing, powerful utility, and the special DeepSnitch AI bonus adding as much as 300% extra DSNT to your bag, the rewards could be massive if you lock in at exactly the right time.

Don’t let the market erase your gain. Reserve your tokens in the DeepSnitch AI presale now and join X or Telegram for the latest project updates.

FAQs

1. What is the DeepSnitch AI bonus code, and how does it work?

DeepSnitch AI offers four bonus codes tiered by allocation size. DSNTVIP30 gives 30% extra tokens, DSNTVIP50 gives 50% on $5K or more, DSNTVIP150 unlocks 150% for larger positions, and DSNTVIP300 gives 300% extra on allocations of $30K and above. All codes expire at the March 31 launch.

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2. Why did Bitcoin exchange inflows spike, and what does it mean for the market?

Hourly Bitcoin inflows hit 6.1K BTC on March 16, the highest since February 20, with large deposits accounting for 63% of total inflows. CryptoQuant’s head of research flagged that historically, these spikes precede increased selling pressure.

3. When is the DeepSnitch AI TGE, and what happens after?

DeepSnitch AI lists on Uniswap on March 31. The seven-day claim window opens at TGE, with DEX and CEX listings expected to follow.

The post Special DeepSnitch AI Bonus Code: Limited Time Left To Reserve 300% Extra Tokens Ahead of Launch, Bears Lose Grip On ZEC and DOGE appeared first on Blockonomi.

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XRP Needs CLARITY Act Momentum to Unlock the Next Critical Price Zone

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Ripple Makes Major Move Affecting US and Canadian Customers: Details


Large XRP holders added 200 million tokens over two weeks, quietly building their stack even as the price failed to hold $1.50.

XRP has pulled back under $1.50 after briefly surpassing $1.60 yesterday, with a popular analyst saying the token now sits at a critical decision point and that a single piece of legislation could determine whether it breaks higher.

According to EGRAG CRYPTO, the CLARITY Act is the primary catalyst standing between XRP’s current price and a potential run past the $1.65 to $1.70 resistance band they dubbed “Zone 1.”

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An Ascending Triangle With One Condition Attached

In their analysis, posted on X on March 18, EGRAG pointed out that XRP was forming an ascending triangle just below the $1.65-$1.70 range.

This is a pattern that usually leads to upward breakouts, and, according to the analyst, it shows rising lows, which would suggest that buyers were stepping in. The chart also showed that resistance has so far been flat, meaning that liquidity is concentrated above the current level.

EGRAG estimated that there is a 65% chance the XRP price will break above Zone 1, mainly due to structure and building compressions. However, the other 35% points to a rejection or fakeout, which they believe could happen if the CLARITY Act is postponed.

The Ripple token has gone up about 6.5% in the last seven days, with a range stretching from $1.37 to $1.60. That breakout happened around the same time as a buildup in derivatives positioning, as revealed by CryptoQuant contributor Amr Taha. According to him, XRP’s open interest delta rose by $16 million on March 13 and another $18 million on March 16, with the second wave coming just before the cryptocurrency’s jump above $1.50.

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Whale activity followed suit, with chartist Ali Martinez reporting that large addresses had added 200 million XRP in the last two weeks, bringing their total from 10.88 billion to 11.08 billion.

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But despite all this, XRP was rejected at $1.60, and was trading near $1.45 at the time of writing, a price that another market watcher, Tara, stated they were closely monitoring, referring to it as the macro 0.618 Fibonacci support level.

What Zone 1 Doesn’t Unlock

EGRAG’s analysis made it clear what the $1.65 to $1.70 zone can trigger, as well as what it cannot deliver on its own. According to them, while breaking above that range would be a meaningful technical event, getting to the next level at $2.60 and beyond requires additional conditions.

These include institutional flows or ETF-style exposures, stable BTC prices, or a drop in the number one cryptocurrency’s dominance, as well as weekly XRP closes above the $1.85-$2.00 band.

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The CLARITY Act itself is moving, with negotiations possibly concluding as early as next week, according to investor Paul Barron. U.S. President Donald Trump had publicly blamed banks for holding the bill back in order to protect their deposit base.

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Bitcoin Trips After FOMC But Bulls May Keep Buying

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Bitcoin Trips After FOMC But Bulls May Keep Buying

Key takeaways:

  • Spot market demand through US-listed ETFs and Strategy buying BTC supports Bitcoin’s bullish momentum.

  • Low leverage among Bitcoin bulls reduces the risk of cascading liquidations even if prices drop another 5%.

  • Rising inflation concerns negatively impact fixed-income returns, paving the way for an eventual rotation from gold into Bitcoin.

Bitcoin (BTC) faced a 7% correction after flirting with the $76,000 level on Tuesday. The downturn followed a decline in the US stock market after oil prices surged due to Israel attacking Iran’s largest gas processing facility and the US producer price index rising above expectations.

Despite the recent losses, there is no indication that Bitcoin’s bullish momentum has faded, given how the S&P 500 and US Treasuries have behaved amid worsening macroeconomic conditions. Additionally, Bitcoin bulls have avoided excessive leverage, reducing the risks of cascading liquidations.

WTI oil futures (left) vs. S&P 500 futures (right). Source: TradingView

The S&P 500 index traded merely 4% below its all-time high on Wednesday despite recent weak US job market data and continued pressure from the ongoing war in Iran. The US reported continued jobless claims relatively steady at 1.85 million in the week ending March 7. On Wednesday, the US announced that wholesale prices gained 3.4% in February versus the prior year, the largest gain in 12 months.

As oil prices jumped above $98, investors became more convinced that the US Federal Reserve will not be able to ease monetary policy throughout 2026. CME FedWatch Tool showed that odds for a steady interest rate by September plummeted to 42% on Wednesday, from 89% one month prior, according to implied odds on futures markets.

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Bitcoin under pressure as prolonged war risks heighten investors’ risk aversion

Sticky inflation and the prospect of a prolonged war reduced the odds of economic stimulus focused on expansion, causing investors to avoid risk. However, there is no reason to believe that traders anticipate an imminent crash, at least judging by how interest rates are priced relative to inflation expectations.

US 2-year Treasury minus inflation expectation. Source: TradingView / Cointelegraph

The 2-year Treasury yield traded at 3.71% on Wednesday, while the Cleveland FED 2-year inflation expectation stood at 2.27%, resulting in a 1.44% adjusted return. During periods of extreme fear, higher demand for government bonds tends to result in near zero or negative returns. Conversely, a lack of confidence in US monetary policy can push the indicator to 2.5% or above.

Even if Bitcoin drops another 5% in the upcoming weeks, there is no indication of excessive leverage demand from bulls, meaning low risk of cascading liquidations. Recent bullish momentum has been supported by the spot market, especially through US-listed spot Bitcoin ETF accumulation and Strategy’s (MSTR) aggressive buying activity.

Estimated BTC futures liquidation levels, USD. Source: CoinGlass

CoinGlass estimates that $450 million worth of leveraged long Bitcoin futures would be forcefully terminated down to $68,000, representing less than 1% of the current $49 billion aggregate open interest. The Bitcoin perpetual futures funding rate confirms that bears are becoming overconfident as demand for leverage on short positions has increased.

Related: 74% of institutions expect crypto prices to rise in 12 months–Survey

Bitcoin perpetual futures annualized funding rate. Source: Laevitas.ch

A negative funding rate means shorts are the ones paying to keep their positions open. More importantly, the indicator stood below the neutral 6% to 12% range even as Bitcoin price surged above $76,000, reinforcing the thesis of spot demand sustaining momentum rather than speculation using derivatives markets.

Gold prices dropped to $4,900 on Wednesday, showing signs of exhaustion after holding levels above $4,800 for four weeks. An eventual rotation out of gold could be the trigger for a sustained Bitcoin rally, especially as inflation concerns negatively impact expected returns for fixed-income assets. Overall, there is little indication that Bitcoin’s current bullish momentum has faded.

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