Bitcoin inches down as eyes shift to the Fed
Bitcoin lost modest ground on Wednesday but still traded near $105,000 following a 2% drop yesterday.
It comes as traders await the Federal Reserve’s policy decisions later today, which could hurt high-risk assets such as bitcoin.
Concerns were allayed in the markets as investors shrug off President Trump’s threats to enter the conflict against Iran.
Focus on Fed
Traders are now focused on the Federal Reserve’s policy decisions later today, expected to hold rates unchanged at below 4.5%.
The Fed will provide its forecasts for US growth, inflation, and interest rates this year, crucial for influencing the market’s future outlook.
Bitcoin hit $103,371 on Tuesday amid the Middle Easter tensions, which entered its sixth day with news about a potential US entry.
Escalation at any point remains possible and could shake the markets if Trump went ahead with a threat to strike Iranian positions.
Positive Signs
Despite the geopolitical concerns, there were positive legal signals, with the US Senate passing the GENIUS bill regulating Stablecoins, in wait for a similar approval by the House then the President.
It’s an important achievement for the crypto industry and puts a legal framework for their operations, boosting their credibility.
Trump Media Seeks Launch of Crypto ETFs
The Trump Media & Technology Group sent a request to the SEC to launch new bitcoin and ethereum ETFs according to a new filing.
This is the second such request of the Trump group, and will join a jam packed market for such ETFs in the US in recent months.
Otherwise, recent Faraside Investors data showed investments into bitcoin ETFs surged to $408.6 million on Monday, the second highest this month.
Oil prices stabilize as the Iran-Israel conflict enters its sixth day
Oil prices were little changed on Wednesday after a 4% surge in the previous session as markets assess the possibilities of supply disruptions due to the Iran-Israel conflict, with questions about a possible entry by the US.
US crude futures rose 0.2% to $76.61 a barrel as of 10:58 GMT, while US West Texas futures added 0.2% to $75.01 a barrel, after a 1% drop earlier in the session.
Trump Threatens
US President Trump warned that America’ patience is running out, and called for Iran’s unconditional surrender.
Trump earlier said the US won’t kill Khamenei for the time being but his remarks continued to grow more aggressive every day.
Analysts worry that a US entry into the fray would widen the scope of the conflict and threaten the region’s energy infrastructure.
The possibility of the closure of the Hormuz strait in particular is of a huge concern to many investors and could send oil prices to over $120 a barrel according to some analysts.
Iran is currently OPEC’s third biggest oil producer at 3.3 million bpd.
Will the Crisis Push the Fed to Cut Rates?
Now markets await the Federal Reserve’s policy decisions later today, expected to maintain rates unchanged at below 4.5%.
But global tensions and concerns about growth could prompt the Fed to cut rates by 25 basis points in July, faster than the September timeline expected by analysts.
Inventory Drawdown
Initial data from the American Petroleum Institute showed US crude stocks fell by 10.1 million barrels in the week ending June 13, with official EIA data scheduled later today.
Gold moves in a negative zone before the Fed's decision
Gold prices fell in European trade on Wednesday, resuming losses and backing off two-month highs on profit-taking as investors shun big positions before the Fed’s policy decisions later today.
Analysts widely expected the Fed to maintain interest rates unchanged for the fourth straight meeting as markets await fresh clues on the path ahead for monetary policies this year.
The Price
Gold prices fell 0.5% today to $3370 an ounce, with a session-high at $3400.
On Tuesday, gold rose 0.1% after losing 1.4% in the previous session away from a two-month high at $3451.
The Fed
The Federal Reserve is convening later today to discuss policies, and is widely expected to hold interest rates unchanged at below 4.5% for the fourth straight meeting.
The Fed will likely also provide important clues on the future path of US interest rates this year amid mounting geopolitical tensions related to Trump’s tariffs.
US Rates
According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut in June stood at 1%.
The odds of a July rate cut stood at a slightly better 19%.
Now traders expect 50 basis points of Fed rate cuts overall this year, starting with September then October.
SPDR
Gold holdings at the SPDR Gold Trust rose 4.01 tons yesterday, the fourth increase in a row, to a total of 945.94 tons, the highest since April 29.
