Good morning, and welcome to First Mover. Here’s what’s happening this morning:

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Bitcoin bulls struggled to keep Wednesday's post-Fed recovery rally going, leaving the top cryptocurrency in stasis under $40,000.

The upward momentum stalled as the dollar bounced against major fiat currencies, trimming losses seen late Wednesday after Fed Chairman Jerome Powell downplayed prospects of a 75 basis point rate hike in coming months.

The dollar index (DXY), which tracks the greenback's value against major currencies, jumped 0.7% to 103.25, having dropped 0.9% to 102.51 Wednesday. The futures tied to the S&P 500, Wall Street's benchmark index, and the tech-heavy Nasdaq index traded at least 0.5% lower, signaling a weak open following Thursday's surge. Heading into the meeting, the Fed funds futures saw around a 40% chance of a 75 basis point hike in June. Therefore, risk assets picked up a bid after Powell dashed hopes of a bigger move.

Observers were unsure if the rally could continue, given the Fed has embarked on the steepest tightening cycle in decades. After March's 25 basis point hike, the central bank raised rates by 50 basis points yesterday and signaled similar outsize moves in the coming months. Further, the central bank announced quantitive tightening – the process of reducing the Fed balance sheet – which will start with an initial combined amount of $47.5 billion from June and reach the $95 billion level within three months.

The most hawkish statement came when a reporter asked Powell whether the Federal Open Market Committee (FOMC) has the courage to endure recessions to bring inflation down if that were the only way necessary. Powell replied, "we won't hesitate to do it."

"The hawkish Fed expectations may not let the bulls take the reins of the market," Ipek Ozkardeskaya, senior analyst at Swissquote Bank, wrote in a LinkedIn post while noting the post-Fed bounce in risk assets.

Brian Tehako, chief investment officer of Warwick Capital, said, "Bitcoin could gather steam if the DXY breaks down from this [up] trend," adding that the Fed overall was hawkish.

The dollar index has bounced up from the former resistance-turned-support, indicating the path of least resistance is to the higher side.

The forward-looking U.S. inflation expectations surged following the Fed rate decision. So, the Fed officials could resort to more hawkish jawboning ahead of the June meeting, keeping gains in risk assets under check.

Lastly, monetary tightening is becoming a global phenomenon. The Reserve Bank of India raised rates by 40 basis points yesterday, while Hong Kong, Saudi Arabia, Kuwait, UAE and Bahrain matched the Fed's 50 basis point hike early today. The Bank of England raised rates by 25 basis points to 1% soon before press time.

On-chain data paints bullish picture

The seven-day average of the number of coins last active at least a year ago has risen to a record high of 64% of total bitcoin in circulation, according to data provided by Glassnode.

That's a sign of strong holding sentiment in the market, according to Noelle Acheson, head of market insights at Genesis Global.

"If BTC isn't moving, it's a long-term holding. At an all-time high. Definitely not nothin," Acheson tweeted.

Today’s newsletter was edited by Omkar Godbole and produced by Parikshit Mishra and Stephen Alpher.