Fed rate cut chance hits zero, threatening stagflation where Bitcoin thrives as a hedge against long term inflation

Traders are now pricing in a potential Federal Reserve interest rate hike by October, with the odds of a cut for April dropping to zero, driven primarily by surging oil prices following Middle East escalation. This hawkish shift has caused bond yields to rise and equity funds to see significant outflows as cash becomes more competitive, pulling capital from risk assets like Bitcoin and gold. Bitcoin's effectiveness as an inflation hedge is compromised because its narrative relies on easing monetary policy, which is now unlikely if oil-driven inflation persists without a recession. The market faces two paths: if oil prices quickly retrace and labor data softens, the Fed might revert to easing expectations, benefiting Bitcoin; however, if oil remains high and core inflation stays sticky, the Fed faces a 'higher-for-longer' scenario, forcing Bitcoin to trade more like a duration-heavy risk asset, potentially leading to a price decline toward $58,000, unless long-term inflation expectations break out into a full stagflation scenario.

(Source：CryptoSlate)