- This topic has 28,100 replies, 54 voices, and was last updated 36 seconds ago by .
-
Hawkish Fed outlook, Israel-Iran tensions weigh on crypto as rebound hopes hinge on H2: analysts
A hawkish interest-rate outlook and renewed tensions in the Middle East are pressuring bitcoin and other cryptocurrencies, although some analysts still see room for a rebound later this year.The Federal Reserve is expected to leave its benchmark rate unchanged Wednesday, but futures now imply just one or two cuts in 2025, down from three or four at the start of the year. Traders also remain wary of tariff-driven inflation, which could keep policy tight for longer.
Valentin Fournier, lead research analyst at BRN, stated that volatility stemming from unchanged funding rates and the Israel-Iran standoff could further depress bitcoin prices. The uncertainty has throttled recent crypto ETF inflows, Fournier added.
“The combination of hawkish rate outlook, slowing ETF inflows, and rising geopolitical risk has turned short-term momentum negative,” BRN’s analyst said
“The market will closely watch the Fed’s language on future rate cuts, which may determine if the current dip deepens or finds support. Given this uncertain backdrop and positioning just below previous highs, we are de-risking. The path forward will likely be volatile, and any deterioration in the geopolitical landscape could trigger sharper downside moves.”
Hope for H2
Bitcoin fell below $103,000 after Israel’s airstrike on Iran last week and was trading around $105,000 on Wednesday, down alongside ether, XRP, and Solana. Still, 21Shares crypto research strategist Matt Mena argues that the backdrop could shift bullish if the Fed delivers its first cut in September, odds the market currently assigns to 65%.
Mena argued that capital rotation from traditional money markets may lead to substantial allocations to crypto ETFs if rate cuts occur in the third quarter.
“The S&P 500 is now less than 5% from its record high, and money market fund assets are at a record high of $7.5 trillion – capital that’s likely to rotate into risk assets like crypto as rates begin to fall,” he said. “Combined with venture funding hitting a 3-year high, institutional participation is accelerating. With macro tailwinds building, the setup for Bitcoin and digital assets continues to strengthen heading into H2.”
For now, analysts agree the market remains hostage to Fed language and headlines from the Middle East, leaving prices range-bound until clearer signals emerge. Meanwhile, BTC options open interest remained near all-time highs, a possible sign of investor confidence.
BTC chart
Commerzbank on Overnight News
Commerzbank in its “European Sunrise” note of Wednesday highlighted:Markets: United States Treasuries better bid in late New York session, long-end weakens in Asia. U.S. equity indexes close weaker, e-minis stabilise, Asia mixed. EUR drops below $1.15. Brent rises to around $77/barrel.
U.S.: Regulators mull cutting SLR to 3.5%-4.5% from 5% for holding companies and 6% for subsidiaries, but no special exemption for USTs (Bloomberg sources). The Federal Reserve will hold a June meeting regarding possible revisions to the supplementary leverage ratio next Wednesday.
Middle East: President Donald Trump had long meeting with the national security team on the escalating Middle East conflict, according to Bloomberg sources. Trump calls for Iran’s “unconditional surrender”, says US will not “take out” Iran’s Supreme Leader Ayatollah Ali Khamenei for now. Iran is preparing possible retaliatory strikes on U.S. bases, according to officials. United Kingdom’s Prime Minister Keir Starmer says he has “no doubt” Trump will stay out of the Isreal-Iran fight.
EUROPE:
ECB: Governing Council member Francois Villeroy de Galhau says the European Central Bank should incorporate oil prices and euro in monetary policy decision.
EU: The European Commission is offering member states the option to channel unspent pandemic recovery money into the European Defence Industry (EDIP) fund (Bloomberg). Separately, the EC is planning a public consultation on possible broader adoption of ABS in banks’ LCR.
Portugal: Finance minister reiterates plans to continue reducing debt and balancing the budget.
ASIA:
China: The central bank (PBoC) will pilot innovations in structural policy tools such as establishing a digital yuan and developing freely traded offshore bonds, according to Governor Pan Gongsheng.
US 10Y Yield
What is a bunker buster bomb and how does it work?
A bunker buster bomb is a type of precision-guided munition specifically designed to penetrate hardened targets, such as underground military bunkers, command centers, storage facilities, or reinforced concrete structures, before detonating to destroy whatever is inside.
• Israel needs a 15-ton ‘bunker buster’ bomb to destroy the last untouched nuclear facility in Iran, but only the US has one.
• Such a powerful weapon – the largest non-nuclear bomb in the US arsenal – is needed because the target, Fordow Fuel Enrichment Plant, is built some 300 feet inside a mountain near the city of Qom, two hours south of Tehran.
• The heavyweight explosive is known as a GBU-57A/B Massive Ordnance Penetrator and was designed by Boeing for the United States Air Force.
• Its huge weight means it can only be delivered with a B-2 Spirit stealth bomber – a jet Israel’s air force does not possess.
Image: New York Post
Asian Currencies Performance Likely to Diverge Further
The performance of Asian currencies will likely diverge further, driven by a mix of structural and cyclical factors, ING says in a research note. While Asian currencies have broadly strengthened over the past month, the Taiwanese dollar and South Korean won could outperform their regional peers, ING says. Others like the Singapore dollar and Indian rupee likely have limited upside despite strong fundamentals, it says. Further scope for managing U.S. dollar-related risks is expected to support the Taiwan dollar and Korean won. Other factors such as large and sustainable current account surpluses should also help.
Korean Won chart
Using my platform as a HEARMAP shows…
Markets on hold waiting to see whether Trump opts for
Diplomacy or Military intervention in the Israel-Iran war
Dollar slightly weaker
Gold consolidating below 3400
Stocks a touch firmer
Crude oil backed off after an initial spike higher
Key event: FOMC decision
Keep an eye on headline news
What caught my eye: Trump silence since he met with advisors on the war yesterday
Note: US federal holiday on Thursday
Only Trump knows what he will decide… anything else is just speculation
Advanced Micro Devices Inc. – AMD
AMD managed on the second attempt to go over channel resistance line at 123.30, after testing previous resistance / turned to support at 115.05 and today made a new high.
Now it has to stay above 124.50 and most importantly above 114.05 ( that line going down)
Resistances: 130.70 & 131.70
- You must be logged in to reply to this topic.