#FOMC Impact Keeps Building

Brothers, the Federal Reserve just wrapped up its meeting on June 17, and the dot plot directly slapped the market in the face. Nine officials clearly support a rate hike by the end of the year, and six even hinted that it won’t be just once. The dot plot’s median jumped from 3.4% expected in March straight to 3.8%, effectively wiping out the fantasy that “rate cuts this year are possible.”

The market originally had fully priced in a 25bp rate hike—so of course, the real thing actually showed up. The Fed kept rates unchanged at 3.5%-3.75%, but this round of hawkish messaging in the dot plot is too obvious. Inflation is picking up again due to energy shocks from the Iran conflict, and the labor market is still holding strong. Officials even went so far as to say, “Rate hikes are an option.”

For the crypto market, this shock is more persistent than expected. Risk assets are hit first—BTC and ETH will likely keep coming under pressure, and a new wave of leveraged liquidations could surge at any time. Last year’s several rounds of rate-cut expectations already had us cut deeply enough, and this time the dot plot puts “long-term high interest rates” right on the record—so liquidity drain will be even more aggressive.

As for me, I’ve already taken action: I’m continuing to shift high-beta positions into stablecoins and cash, and cutting leverage down to the minimum level I can tolerate. Stop betting that the Fed will go soft—history shows they only get harder. What about you? If rate hikes actually take effect, how will you adjust your positioning? Will you be honest?