Fed Rate Cuts at 0% as Kevin Warsh Takes Chair
Kevin Warsh was sworn in as the new Federal Reserve chair, with President Trump saying Warsh will stay “independent” on interest-rate policy. Traders using CME FedWatch now price Fed rate cuts in 2026 at 0%, shifting the market toward potential hikes.
At the next FOMC on June 17, CME shows only a 3.5% probability of a 25 bps hike, rising to ~17% for the July meeting and about 67% for the December meeting. With the federal funds target range still at 3.50%–3.75%, this lack of an easing path and rising policy uncertainty can pressure risk assets.
For crypto traders, the key takeaway is the Fed rate cuts narrative is breaking down. Tighter liquidity expectations and higher near-term volatility risk could weigh on Bitcoin, even as cheaper credit can also keep inflation pressure on the Fed.
Bearish
Bearish for Bitcoin. The latest pricing removes the main tailwind for risk assets: Fed rate cuts in 2026 are now effectively off the table (0% probability). Instead, CME implies meaningful odds of rate hikes later this year (especially around December). For BTC, that typically means tighter dollar-liquidity expectations and less incentive for “risk-on” positioning.
In the short term, this can increase volatility around upcoming FOMC events as traders reprice discount-rate assumptions. In the longer term, if the Fed cannot credibly signal easing, the market may sustain a higher-for-longer regime, which historically tends to cap upside for high-beta crypto. Even if lower rates would usually help, the article’s logic emphasizes that cheaper credit could also keep inflation pressure elevated—reducing confidence in a clean easing cycle.