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Cryptopolitan 2025-01-09 09:40:55

Crypto and stock markets don’t care about Fed’s inflation fears

The Federal Reserve dropped its December meeting minutes, and let’s just say the message wasn’t pretty. Inflation is creeping higher, the Fed isn’t feeling generous with rate cuts, and Trump’s economic policies have everyone on edge—even if his name didn’t make it into the official documents. None of that seemed to bother the markets much though. Stocks and crypto both marched to their own chaotic beat. “Almost all participants judged that upside risks to the inflation outlook had increased,” the minutes revealed. Officials pointed fingers at strong inflation reports and the potential ripple effects of changes in trade and immigration policies. In response, they hinted at slowing the pace of rate cuts. For traders hoping for relief, that was a major buzzkill. But did Wall Street care? Not really. The S&P 500 climbed 0.16%, the Dow Jones added 0.25%, and even the Nasdaq, dragged down by tough days for giants like Palantir and Bitcoin whale MicroStrategy, only dipped 0.06%. No big crashes, no panic selling. Investors have seen worse, and they acted like it. Wall Street shrugs off the Fed’s caution The 10-year Treasury yield hit a dizzying 4.73% during intraday trading, its highest since April. Normally, a number like that would send shockwaves through the market, but traders barely blinked. Why? Simple. They’ve already priced in the Fed’s pessimism. December’s dot plot—which forecasted just two measly quarter-point cuts in 2025—was the real blow. Yesterday’s news? Old hat. Christopher Waller, one of the Fed’s governors, stepped in to calm nerves. Speaking from Paris, he explained that recent inflation spikes were driven by “imputed” prices like housing services. Meanwhile, “observed” prices, which cover other goods and services, show signs of disinflation. Translation: it’s not as bad as it looks. Waller even said he’d back more rate cuts in 2025 if the economy holds up. While stocks took the news in stride, crypto had a rougher time. Bitcoin slid to $92,000 on Thursday after hitting $102,000 just a few days earlier. Still, crypto enthusiasts remain bullish, convinced that better regulations this year will boost prices and help companies like Coinbase, MicroStrategy, and Robinhood. Bitcoin’s volatility isn’t new, but it’s hard to ignore its momentum. It’s already up 3% this year after a standout 120% gain in 2024. Fed’s official statement is confusing In their statement, Fed officials claimed that the economy is growing “at a solid pace,” but noted the labor market is easing and unemployment has ticked up—though it’s still low overall. Inflation is inching closer to their 2% target but remains elevated, and they’re not taking their eyes off the risks. The central bank lowered its target range for the federal funds rate by a quarter-point last month, bringing it to 4.25%–4.5%. They promised to keep assessing incoming data and adjust policies if needed, all while sticking to their dual mandate: maximum employment and stable prices. The Fed also said it would continue reducing its holdings of Treasury securities and mortgage-backed securities, keeping the balance sheet tight. What could shake things up next? The U.S. jobs report for December, due Friday. From Zero to Web3 Pro: Your 90-Day Career Launch Plan

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