Sep 21, 2023

The U.S. Federal Reserve on Wednesday held monetary policy steady as anticipated, leaving the range for its benchmark interest rate at 5.25% to 5.50%.

Video transcript

We are prepared to raise rates further if appropriate. And we intend to hold policy at a restrictive level until we're confident that inflation is moving down sustainably toward our objective in determining the extent of additional policy firming that may be appropriate to return inflation to 2%. Over time. The committee will take into account the cumulative tightening of monetary policy. The lags with which monetary policy affects economic activity and inflation and economic and financial development. That was fed chair Jerome Powell speaking yesterday at the after the FO MC held interest rates steady. Joining us now to discuss is the senior market analyst for the America's Edward Moya, along with Crypto is Macron now economist and the new host of Coin Desk Market Daily podcast. Noel Acheson. Welcome to Noel and congratulations Noel. Thank you so much, Lawrence. Hi Jane. Hi Emily. Great to be with you. Hi Edward. Good to see you too. Nice to see you too. Good seeing you again and both of you. Uh I wanna start off with Noel. Ok. Look, this was no surprise at all that the fed would uh keep rates the same and I kind of feel that, although everyone seems to be waking up and saying, oh my God, the fed is hawkish. They've been telegraphing that there'll be at least one more rate hike, uh, coming up by the end of the year. I mean, I think they, they've pretty much put up billboards in Times Square saying this. So why is everyone so shocked? It seems when, when I turn on the TV, when I look at prices, everyone seems so shocked that, that the fed is saying what they're going to do and all of a sudden they, they, everyone, they've said the same thing over and over again and people are reacting differently. What's going on? The answer, Lawrence is in four simple words, the power of numbers. We hear so many words and let's face it. There's a lot I don't ever remember fed officials talking quite so much as they have been recently. So many words from Fed officials about how rates could be higher for longer and they just tend to wash over us after a while, you know, when you hear the same thing again and again, it just sort of stops even resonating. But numbers, the numbers that we saw yesterday today in the summary of economic projections, they were startling. They were, it didn't surprise me. I was expecting them to raise the forecast for fed funds rate for the end of next year. I didn't think they'd do it by this much. It was everyone seeing those numbers, everyone seeing the fed effectively take two rate cuts off the table next year. That's what made them realize that they're actually serious and numbers have made it real. And so, uh what, what's been your take on this and, and how does it affect specifically, uh the crypto markets? I mean, we see prices went down a little bit. We had this Mount Gox, uh uh uh news that basically, uh the coins won't be on the market for a little bit longer. Uh, at least, and yet the prices went down, you would think it would go up because there wouldn't be as many coins on the market. But it seems like the fed outweighed it. What's going on right now, everyone is focused on the Fed and I think the post fed hangover is suggesting risky assets are in for a rough patch over the next year. Mainly because you're going to see a lot of crypto companies are going to be dealing with very tough times as far as refinancing. I think that is going to become a bigger concern. I think that for this economy right now, we're taking a look at what's happening in the US and what's happening abroad. You know, the global growth picture is deteriorating fairly quickly. Today, we had the Boe pause, we had an ECB member saying the peak is in place. The next move is cuts. So I think what we're starting to see is there's this fear that now that it's, it's clear that the fed is going to, you know, keep rates much elevated, I think for probably, you know, all of next year, you know, we, they're penciling in two rate cuts, but if we continue to see inflation remain sticky and, you know, if we take a look at energy prices, I think there's a good chance that, you know, we, we could be probably seeing inflation heat up in the, in the winter there's, and that will pass on to, you know, those non core CPI readings. So I think there's expectations that it's just going to be a very messy growth picture and that's probably going to support a range bound Bitcoin because we're still waiting for ETF decisions. There's a lot of court battles that are still happening and uh it's just a, a very, you know, I think AAA time where there's a lot of money that's hesitant to get back in. So this is a question for both Edward and Noel. But let's start with Noel. Are we in a crypto winter or not? No, I don't think we are more. I think we passed that. I mean, we're, what, 70% more than off the lows. That doesn't sound very winter. I, to me we're in a very, very chilly crypto spring. I would say we've seen just this past week and there is so many funds in starting to launch so many funds, money being raised for crypto VC funds and this is generally the sign of green shoots. We saw this in the last cycle. We're seeing it now, I counted at least six such announcements from Blockchain capital on down through the ranks over the past seven days. Things are starting to feel slightly different and there's so much going on in crypto outside the United States. It's understandable why most us residents think it still feels like a winter outside the United States. As, as Michael just said in your previous section, it's a big place and there's a lot going on. So, no, I don't think we're in crypto winter now. Does that mean the price is going to shoot up for a while? No, as Edward was just saying, things are very, very uncertain right now. The the outlook is rough. Bitcoin is often related to the dollar inversely, of course, and with rates higher for longer that is going to support the dollar, that's not great for Bitcoin. Higher rates are not great for Bitcoin either because it doesn't yield anything. So we are in for some macro uncertainty in the last crypto cycles. We didn't have this kind of a weight keeping prices down. Oh, I completely agree that, you know, the, the crypto winter ended a while ago, I mean, we've seen, you know, this year was there was a lot of early momentum and I think, you know, obviously we're in the sideways market and and there's still a lot of question marks. But I think, you know, the growth potential is still there. The institutional interest is, is, is, it's still buzzing. I mean, city had a big uh debut of their Blockchain, you know, payments program. So I think there's, there's a lot of upside momentum. Um I've been to a couple of events, I went to one forum last week talking about uh with some Blockchain companies that are, they're, they're in the fundraising stage. And I think there's, there's a lot of momentum that is still uh growing in the U si mean, but when you take, when you take a look though, at the outlook for the next 6 to 12 months, it's, it's going to be difficult because I think what we're forgetting is we're not used to this um bond market environment. You're gonna start to see a lot of people are going to be um content just locking in 5% or 6% uh risk free investment. So I think there's, there's going to be a battle for, you know, which risky asset do you want to gain exposure in? But I think when you take a look at the, the global picture and, you know, equities, commodities, um crypto will have its place. And I think there's still good optimism here that, you know, is the, is the, you know, the an extension of a bull run uh likely to happen in the next 12 months, I think, you know, the there's a good case to be made that that could happen. Um But I think there's right now short, still a tremendous amount of short term risks. No. What's the catalyst for you? You talk about these, these shoots signaling a spring on the horizon. But the, the reality is there's very little low liquidity, there's little interest from new investors. What's the catalyst for you for bringing that new interest that new liquidity to the markets? Two things, one would be the spot ETF approval. And I think that will happen and I think we'll get it this year but not until near the end. And the second thing is, and this may sound very pessimistic, but you know, thinking ahead a stock market crash, a realization that we are coming in for a recession, a realization that the growth forecasts that the fed shared with us last night are very unrealistic that will wash the market out of the uncertainty that is overhanging it at the moment. And after you know, falling perhaps along with stocks as it tends to do, Bitcoin will start to enact it or live up to its role as a hedge against economic craziness, really against the printing that we will no doubt see especially coming into election year against economies around the world scrambling to save their markets. Bitcoin is going to be a very good hedge for for what's coming after that. And smart investors will be accumulating positions before you're right to mention liquidity. That is the big barrier at the moment. But once the environment, once the outlook starts to become clearer, liquidity will come back, it just takes market makers to have a bit more confidence that institutional interest is returning. Do you agree? I think we really need to see the retail and institutional interest to come back. And I think the the problem is that as far as anticipating, you know, the, you know, the a diversification trade into Bitcoin equities is going, that's going to be the hardest thing to gauge right now because I think right now we're still looking at possibly 5 10% drawdown um over the next quarter or so, but there, there's still, I think a lot of investors here that are hesitant to get back in the interest, um um especially in the Americas has been very dormant. Um And um it will, it will take, I think as long as we don't see a Bitcoin ETF approval trigger a, you know, a sell the event type of reaction. Um If we can, if we can really start to see prices stabilize above 32,000, uh then, then I think you'll, you'll get some steady momentum trading back in. But I, I I'm anticipating that, you know, will we, you know, are the, the, the risks are, I think still, you know, short term sideways trading here for, for Bitcoin. But, but I think, you know, with the, the having there, there's steady institutional interest that's growing. Once we have some breakthrough developments as far as use case arguments, then I think you, you then I'll be a little bit more optimistic, I think for crypto. All right, Ed Noel, thanks for joining us this morning. A pleasure seeing you both. Thank you. Thanks so much. That was the senior market analyst for the Americas Edward Moya, along with crypto is Macro now economist Noel Ai.

Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.