Bessent tells Fed to ‘wait and see’ on cuts as war-driven inflation clouds Bitcoin

Treasury Secretary Scott Bessent has urged the Federal Reserve to adopt a 'wait and see' approach regarding interest rate cuts, citing war-driven inflation as a significant obstacle. The conflict in Iran is reportedly driving up fuel costs, which complicates the inflation outlook and could delay the return to the Fed's 2% target. This situation presents a dilemma for the Fed: cutting rates too early risks validating higher prices, while holding rates could further strain consumers and businesses. For Bitcoin, this macro environment disrupts its bullish narrative, which relied on expectations of Fed easing and increased liquidity for risk assets. Elevated interest rates increase the cost of capital, dampen risk appetite for speculative assets like Bitcoin, and make the dollar and real yields more attractive. While Bitcoin may still rally on other factors, rallies built on leverage are less sustainable, and the macro support many expected is now uncertain. The immediate consequences include persistently high costs for consumers and businesses, with less disposable income available for investment in assets like Bitcoin. The crypto market's future trajectory now hinges on whether inflation cools sufficiently to allow policymakers to ease monetary conditions.

(Source：CryptoSlate)