FED Pauses Its Hikes – Crypto Gets Five Dates to Watch

The Federal Open Market Committee’s statement leaves policy where it landed after September’s quarter-point increase, the central bank’s first hike since 2023.

A pause, not a change of direction

Few traders expected anything else. Monday’s Bitcoin outlook cited a 90.6% probability of a hold on CME FedWatch, and a month earlier that figure had been closer to a coin toss.

What changed over those weeks was the calendar. Deutsche Bank economists argued before the meeting that the Fed might want to “stay out of the headlines for raising rates just ahead of a midterm election” where affordability dominates the debate. Most officials had already pencilled in one more increase this year in their September projections, and December was the obvious slot for it.

That leaves the hold looking less like relief and more like postponement. According to CME FedWatch data earlier this week, futures traders put the odds of a December hike at roughly three in four, up from about 42% a month before.

The inflation numbers behind the hawkish lean

September’s consumer price index, published October 14, showed prices up 3.7% from a year earlier and 0.6% in that month alone. Gasoline jumped 9.1% and accounted for more than half of the monthly rise, as the US-Iran war kept crude near $100 a barrel.

Energy explains the headline, but not everything. Core CPI, which strips out food and fuel, climbed to 2.6% year over year from 2.4% in August, with shelter, airfares, medical care and used vehicles all moving higher. A rising core rate is harder for the Fed to look through than a gasoline spike.

Warsh isn’t handing out a roadmap

Kevin Warsh has made a point of refusing to pre-commit. Speaking at the IMF and World Bank meetings in Bangkok on October 16, he said “I don’t prejudge meetings” and declined to preview any decision for the rest of the year. He framed September’s move as removing some accommodation to secure price stability.

October’s meeting also came without a new Summary of Economic Projections. The next set of projections, including the dot plot of officials’ rate expectations, is due with the December decision.

With little guidance from the chair, other policymakers may say more. The pre-meeting communications blackout runs through October 29, so FOMC participants can speak publicly again from October 30. In July, Cleveland’s Beth Hammack, Minneapolis’s Neel Kashkari and Dallas’s Lorie Logan dissented in favor of an immediate hike. All three vote this year, and their first speeches after the meeting will show whether that hawkish bloc is still pushing.

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How the rate path reaches Bitcoin

Bitcoin went into the decision near $80,000. The channel to watch is yields: the 10-year Treasury traded just under 5% on Tuesday morning and the 30-year above 5.3%. When safe government debt pays that much, holding an asset with no yield costs more, and a firmer December outlook would add to that pressure through bond yields and the dollar.

September offers a useful reference. Bitcoin traded near $76,000 on the day the Fed raised rates and climbed above $85,000 by September 30, after a cooler inflation reading. The decision itself mattered less than the data that followed it.

Five dates between now and December 9

The midterm record needs context

For crypto companies, the election matters mainly through Congress: committee leadership and the fate of market-structure legislation depend on who controls each chamber.

The price history is weaker evidence. Coindoo’s earlier analysis found Bitcoin fell roughly 53%, 24% and 21% during late-summer stretches before the 2014, 2018 and 2022 midterms. All three came during wider crypto bear markets that overlapped with the halving cycle, so the pattern says more about those cycles than about voting.

The PCE and GDP figures land at 8:30 a.m. ET on October 29. By December 9, policymakers will also have the October jobs and CPI numbers in hand, and those four releases will carry more weight in December’s decision than today’s pause.

This article is provided for informational purposes only and does not constitute financial or investment advice. Policy expectations, economic data and political developments can affect cryptocurrency markets unpredictably.

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