FOMC Minutes Warn; Rising Jobless Claims Boost Crypto Bulls
FOMC minutes released on Wednesday revealed that the Federal Reserve remains cautious on monetary policy and is not ready to signal a pivot. The minutes highlighted ongoing inflation concerns and kept interest rate hikes on the table. Breaking down the FOMC minutes, officials stressed the need for more data before easing policy. Traders interpreted the cautious tone as a bearish signal for risk assets.
In contrast, the latest weekly jobless claims rose above 225,000, surpassing forecasts and marking the highest level in several months. Rising jobless claims may indicate a cooling labor market, reducing inflationary pressures. This development could prompt the Fed to reconsider its hawkish stance. A slowdown in the labor market often precedes a pause in rate hikes.
In the crypto market, Bitcoin and major altcoins initially dipped after the FOMC minutes. Traders feared tighter monetary policy would curb liquidity and dampen risk appetite. However, the uptick in jobless claims has renewed bullish sentiment. Market participants now speculate that the Federal Reserve may delay further rate hikes, which could improve funding conditions for digital assets.
Short-term volatility remains high as investors weigh conflicting signals from the Fed minutes and unemployment data. Over the longer term, a potential pause in rate increases may support a renewed crypto rally. Risk assets such as Bitcoin (BTC) tend to benefit when the Fed shifts toward a dovish stance. Yet, traders should remain vigilant about economic data and Fed projections in the coming weeks.
Bullish
The cautious tone of the FOMC minutes initially triggered a sell-off in risk assets, including cryptocurrencies. Historically, when Fed minutes signal continued rate hikes, liquidity tightens and crypto prices fall. However, the unexpected rise in weekly jobless claims above 225,000 could weaken the labor market and reduce inflationary pressures. This data increase often prompts the Fed to delay or halt rate hikes to prevent a recession, creating a dovish shift.
In past cycles, such as late 2023, similar patterns surfaced: a spike in unemployment claims preceded the Fed’s decision to pause interest rate increases. Crypto traders benefited as Bitcoin rallied in response to improved funding conditions. Accordingly, the current combination of hawkish Fed commentary and labor market softening suggests a potential pivot towards easier policy. A dovish Fed typically supports higher risk appetite and price appreciation in digital assets.
In the short term, volatility may remain elevated as investors digest each economic report and Fed communication. Yet if jobless claims continue rising, the probability of a Fed pause or rate cut increases, which is positive for crypto. Over the longer term, a shift to monetary easing could catalyze a sustained bull run. Traders should watch upcoming inflation and employment data, as well as Fed projections, to gauge the timing of any policy change.