FROM RATE CUTS TO RATE HIKES
Markets came into yesterday’s FOMC expecting a routine rate hold. Instead, they got one of the most hawkish Fed meetings in years.
The Fed left rates unchanged for a fourth straight meeting, but the real shock came from the updated projections and Kevin Warsh’s first meeting as Fed Chair. Nine of eighteen Fed officials now expect at least one rate hike in 2026. Six of those officials expect multiple hikes. Only one participant sees a rate cut.
At the same time, the Fed raised its inflation forecasts significantly. 2026 PCE inflation was revised from 2.7% to 3.6%, while Core PCE rose from 2.7% to 3.3%. Growth forecasts moved the opposite direction, with GDP expectations cut from 2.4% to 2.2%. Most importantly, the Fed no longer expects inflation to return to its 2% target until 2028.
Then came the biggest surprise. Warsh signaled a complete shift in Fed communication. “Forward guidance is not the business we should be in.” For years, markets have relied on the Fed to hint at future policy moves. Warsh effectively told investors that era is ending.
Markets wanted cuts. The Fed delivered higher inflation, higher-for-longer rates, and less guidance. Risk assets didn’t like it.
MARKETS REACTED IMMEDIATELY
The first reaction was brutal. US equities closed lower across the board.
- S&P 500: -1.21%
- Nasdaq: -1.34%
- Dow Jones: -0.98%
- Russell 2000: -0.72%
Crypto traders were positioned the wrong way. Nearly $500 million was liquidated across the crypto market over the last 24 hours.
Long liquidations reached $354 million while shorts accounted for $128 million. Bitcoin and Ethereum were responsible for the largest share of forced selling as traders who were positioned for a dovish outcome got trapped by the hawkish surprise.
The market is now being forced to reprice a world where rate cuts are no longer guaranteed.
GOLD GOT HIT TOO
XAU was one of the clearest casualties of yesterday’s hawkish Fed meeting. After the updated dot plot signaled higher-for-longer rates, gold sold off sharply as traders adjusted expectations for future monetary policy.
The move makes sense. Higher interest rates increase the opportunity cost of holding non-yielding assets like gold. Technically, gold broke below key moving averages and is now testing support near the $4,260-$4,270 region.
This level becomes critical in the short term. If it fails, the correction could deepen. If buyers step back in and reclaim the moving averages near $4,300, the selloff may prove temporary.
For now, the trend has shifted lower.
FEAR IS RISING, BUT PANIC ISN’T HERE YET
Crypto sentiment weakened following the Fed meeting. The Crypto Fear and Greed Index fell from 24 to 22. That’s a noticeable decline, but it’s important to keep things in perspective. Just last week the index briefly entered Extreme Fear territory at 16.
We’re nowhere near those levels today. Sentiment has deteriorated, but the market hasn’t reached the type of panic that often accompanies major bottoms.
RATE HIKE ODDS ARE SURGING
Perhaps the most important development wasn’t what happened yesterday. It’s what traders are pricing next. Following the Fed meeting, the probability of a rate hike by December jumped sharply.
Polymarket traders now assign roughly a 55% chance that the Fed raises rates before year-end. Just a few months ago markets were debating how many cuts were coming. Now they’re debating whether the next move is a hike. That’s a massive shift in expectations.
PEACE DEAL REMAINS THE MARKET’S BIGGEST BULLISH CATALYST
While the Fed delivered a hawkish surprise, the market still has one major bullish narrative to focus on. The US-Iran peace framework. The United States released the full 14-point Memorandum of Understanding signed between both sides.
The agreement includes:
- Immediate end to military operations across all fronts
- Restoration of commercial shipping routes
- Gradual removal of sanctions
- Release of frozen Iranian assets
- Oil export waivers for Iran
- A 60-day negotiation window toward a final agreement
- Eventual endorsement through a binding UN Security Council resolution
The signing ceremony took place at the Palace of Versailles during a diplomatic dinner hosted by French President Emmanuel Macron. For markets, the significance is clear.
A successful deal could continue pulling oil prices lower, reduce inflation pressure, and offset some of the Fed’s hawkishness. Whether the agreement ultimately holds is another question but right now markets want to believe it will. After yesterday’s FOMC, they need a bullish narrative more than ever.
STRATEGY’S STRC FALLS BELOW $90
One of the more interesting stories outside crypto came from Strategy’s preferred stock. STRC closed at a record low of $89 and briefly traded as low as $88.51. That places it roughly 11% below its $100 stated value despite currently offering an annualized dividend yield of approximately 11.5%.
Strategy has previously stated that the dividend rate can be adjusted monthly to help keep STRC trading near $100. So far, it hasn’t worked. The debate now centers around sustainability.
If Strategy were ever forced to rely on Bitcoin sales to support dividend obligations, it could create downward pressure on BTC itself. Lower BTC prices would reduce the value of Strategy’s reserves and potentially weaken the very foundation supporting those payouts.
It’s a scenario nobody expects today but it’s one investors are beginning to discuss.
HOW CRYPTO IS HANDLING THE FED
Bitcoin remains stuck. Price briefly weakened after the FOMC meeting but is attempting to recover toward key resistance around $65.7k.
Currently trading below resistance while trying to reclaim both moving averages. A successful reclaim would strengthen the case for a continuation toward recent highs and improve overall market structure. Failure here keeps the range intact and increases the probability of another move back toward the lower end of the range near $63k. For now, bulls have work to do.
TON: On-chain positioning continues to show a divergence between whales and retail traders. Data across Binance, OKX, and Gate indicates that larger players have been increasing long exposure while retail participation remains relatively muted.
Technically, it continues to hold key support around the $1.61 area. As long as that level remains intact, the structure remains constructive.
If broader market sentiment improves and risk appetite returns, TON has room to challenge the next major resistance near $1.75-$1.90. The support is holding. Now bulls need momentum.
Whales distributed approximately 420 million DOGE over the last seven days. That doesn’t automatically mean lower prices, but it does show larger holders reducing exposure into strength.
Price continues to face resistance below the major moving averages while struggling to establish any meaningful trend reversal. The $0.0804 support level remains critical.
A loss of that level would expose DOGE to another leg lower and likely invite additional selling pressure. Until resistance is reclaimed, bulls remain on the defensive.
Ethereum attempted a breakout but ran directly into resistance at $1,847. The rejection pushed ETH back into its range and leaves the market at an important decision point. The key support to watch is $1,691.
As long as ETH remains above that level, bulls still have a path toward another attempt higher. If the peace deal narrative continues improving and broader risk assets stabilize, Ethereum could make another push toward its moving averages around the $2,000 region.
However, a loss of support would significantly weaken the structure and reopen the possibility of a move back toward the range lows.
ASTER exploded higher yesterday following a major tokenomics announcement. The project revealed a new buyback-and-burn structure where 99% of platform fees will be used for buybacks while an equal amount of tokens are burned from reserves. The announcement triggered a powerful rally. Today, much of that move has already been retraced.
The reaction highlights a common theme in crypto markets. Narrative-driven pumps often attract aggressive speculative buying before profit-taking quickly follows. Technically, ASTER rejected directly from resistance after the news-driven spike. Price has now fallen back toward the key support area around $0.65-$0.66. If support fails, the entire breakout risks being erased.
For now, ASTER is a reminder that tokenomics announcements can drive momentum, but sustaining that momentum is often much harder.
WHAT TO WATCH TODAY
- Any updates surrounding implementation of the US-Iran agreement
- Oil prices and whether the peace narrative continues lowering inflation expectations
- Bitcoin’s attempt to reclaim $65.7k resistance
- Whether Ethereum can hold above $1,691 support
- Changes in rate hike probabilities after yesterday’s Fed meeting
Yesterday was about the Fed. The next move depends on whether geopolitics can offset what the Fed just delivered.
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