Economic Outlook and Inflation Expectations

The FOMC noted that economic activity continues to expand at a moderate pace. Although employment growth has slowed, the unemployment rate remained low through September. Inflation has risen this year and remains somewhat elevated. The Committee reaffirmed its commitment to maximum employment and a long-term 2% inflation target.

Fed policymakers project core PCE inflation at 2.5% and overall PCE at 2.4% by the end of 2026, down from previous forecasts of 2.6% in both categories. Unemployment is projected at 4.5% for 2025 and 4.4% for 2026. According to the median projection, interest rates are expected to reach 3.1% by the end of 2028.

Securities and Reserves

The FOMC decided to end the reduction of total securities holdings as of December 1. Reserve balances are assessed to be ample, and the Fed indicated it may begin purchasing shorter-term Treasury securities if needed to maintain sufficient reserves. The Committee will continue monitoring incoming data to evaluate the appropriate stance of monetary policy.

Voting Results

The policy decision passed with a 9-3 vote. Schmid and Goolsbee voted to keep rates unchanged, while Miran favored a half-point rate cut. Additionally, four Fed officials forecast an additional two-quarter-point rate cut for 2026.

Bitcoin and U.S. Stock Market Reaction

Following the decision, Bitcoin briefly fell below $92,000 but quickly recovered above $93,000. U.S. stock indices moved higher, with the Dow Jones up 0.62%, S&P 500 up 0.26%, and Nasdaq up 0.03%. Investors are closely watching the Fed’s rate cut and Treasury purchases.

• The Fed will purchase $40 billion in Treasury securities over the next 30 days

• Treasury purchases will begin on December 12

• Policy decision passed with a 9-3 vote

• Schmid and Goolsbee voted to keep rates unchanged

• Miran supported a half-point rate cut

• Four Fed officials forecast two quarter-point rate cuts in 2026

• Reduction of securities holdings ended on December 1

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Miran explained that the growth of stablecoins might influence the Fed’s neutral interest rate. A decrease in the neutral rate could prompt the central bank to lower its policy rates in response. According to CoinGecko, the current total market capitalization of all stablecoins is $310.7 million. Miran added that Fed research indicates this figure could grow to $3 trillion within the next five years.

Impact of Stablecoin Demand on the Economy

According to Miran, stablecoins may increase demand for U.S. Treasury bonds and other liquid dollar assets from investors outside the United States. “I expect stablecoin demand to continue rising, which could have a trillion-dollar effect on monetary policy,” he said.

International organizations, including the International Monetary Fund (IMF), have warned that stablecoins could pose risks to traditional financial instruments and services. U.S. banking groups have also expressed concerns, stating that stablecoins may attract potential banking customers and urging Congress to strengthen regulations.

GENIUS Act and Regulatory Framework

Miran highlighted that the GENIUS Act provides clear guidelines for stablecoin regulation and ensures consumer protection. The law requires stablecoin issuers to hold reserves backed by safe and liquid U.S. dollars at a one-to-one ratio.

“Although I usually approach new regulations with caution, the GENIUS Act gives me significant confidence. This framework provides legitimacy and accountability compatible with traditional dollar holdings,” he said.

Importance of Stablecoins for Investors and the Market

Stablecoins provide liquidity and security for investors while indirectly affecting interest rate policies. Miran emphasized that the growth of stablecoins may increase global investor demand for dollar assets, creating important economic implications.

Bullet List: Stablecoin Effects on the Fed and Market

• Can lower the neutral interest rate, influencing Fed policy rates

• Increases demand for U.S. Treasury bonds and dollar assets

• May create competition for traditional banking and financial services

• Provides legitimacy and accountability through regulatory compliance

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Post-Fed Rally Fades Into Selling Pressure on Bitcoin

Last week, Bitcoin surged past $117,000 after the U.S. Federal Reserve announced a rate cut. However, renewed selling pressure quickly emerged, dragging the leading cryptocurrency down to around $112,000 at the start of this week.

Adding to investor unease, history shows that September has often been a weak month for crypto markets, with past cycles delivering sharper corrections during this period.

1. SOPR Signal: Profitability on the Decline

Wedson highlighted the Spent Output Profit Ratio (SOPR) as the first red flag. This on-chain metric measures whether transactions are being executed at a profit or a loss:

• Above 1: sellers are in profit

• Below 1: sellers are at a loss

Currently, SOPR remains above 1, yet its downward trend indicates weakening profitability on the blockchain.

“The SOPR signal is an excellent tool to detect when profitability is starting to fade. Never before in Bitcoin’s history have investors accumulated this late in the cycle and at such elevated price levels,” Wedson explained.

2. Short-Term Holder Risk Zone for Bitcoin

The second indicator Wedson flagged is the realized price for short-term holders (STH), which now stands near $111,400.

Should Bitcoin dip below this threshold, it could trigger stop-loss liquidations from short-term investors, potentially accelerating a sell-off.

3. Sharpe Ratio Weakens Despite Higher Prices

Finally, Wedson pointed to the Sharpe ratio, which measures risk-adjusted returns. Despite Bitcoin’s higher price levels compared to previous cycles, the ratio has declined.

This suggests that the reward for risk taken is diminishing, limiting Bitcoin’s overall profit potential in the current environment.

Could Altcoins Steal the Spotlight?

While these three indicators paint a bearish picture for Bitcoin, Wedson emphasized that market enthusiasm might not vanish altogether. Instead, he argued that a renewed wave of investor interest could shift toward altcoins, rather than being driven by Bitcoin itself.

*This content is not an investment idea.

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Central Banks Under Fire: “Economic Freedom Is at Risk”

On May 10, Kiyosaki took to X (formerly Twitter) to criticize the central banking system, singling out the Fed for distorting the economy. Citing former U.S. Congressman Ron Paul, he compared centralized interest rate manipulation to price control mechanisms typically associated with centrally planned economies.

Aligning himself with Paul’s views, Kiyosaki argued that such practices undermine personal wealth and erode economic liberty over time. “Fake money leads to corruption and creates dishonest leadership,” he stated, describing the current monetary system as fundamentally flawed.

According to Kiyosaki, Americans can resist this structure by rejecting fiat currency and shifting towards assets rooted in decentralized value.

WORDS of WISDOM from former US Congressman Ron Paul: Author of “End the Fed” and advocate for ending the Fed, all Central Banks, and getting back to a sound honest money system.

Ron Paul states:

“A central bank setting interest rates is price fixing and a form of central…

— Robert Kiyosaki (@theRealKiyosaki) May 10, 2025

Build Your Own Bitcoin and Metals Standard

Kiyosaki’s skepticism of fiat currency is not new. He has frequently referred to the U.S. dollar as a declining asset, inflated by reckless government spending and central bank intervention.

In his view, assets like Bitcoin, gold, and silver provide long-term protection against inflation and are immune to political manipulation. “Don’t work for fake money,” he advised. “Create your own standard based on Bitcoin and precious metals.”

Bitcoin Headed to $1 Million?

In a post dated April 18, Kiyosaki projected that Bitcoin could surpass $1 million by 2035, fueled by ongoing monetary debasement. He also forecasted gold reaching $30,000 per ounce and silver hitting $3,000.

Kiyosaki isn’t alone in his optimism. In February 2025, Cathie Wood of ARK Invest suggested that Bitcoin might climb to $1.5 million by 2030 if global demand continues to rise. Similarly, Eric Trump remarked during a December event in the UAE that Bitcoin’s limited supply could push it to $1 million in the coming years.

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Downtrend Continues: Key Levels to Watch

From a technical perspective, TOTAL3 is clearly following a downtrend on the four-hour chart. If this trend does not break to the upside, a pullback towards $845 billion could be expected in the coming days. However, if the downtrend is broken, the first target to watch will be the $950 billion order block level. This level is considered a crucial threshold for altcoins to regain momentum.

You Might Be Interested In: Elon Musk Talks About the Name of a New Memecoin!

What’s Driving the Decline?

The market uncertainty is not only driven by technical factors. The price movements of Bitcoin and Ethereum have a direct impact on altcoins, and BTC’s failure to break key resistance levels has led to a loss of confidence in the altcoin market. Additionally, macroeconomic developments are reducing risk appetite in the crypto market. Uncertainty regarding the U.S. Federal Reserve (FED)’s interest rate policies is causing investors to act cautiously.

Furthermore, liquidity issues in the market are becoming more apparent. Large investors are opting to stay on the sidelines instead of making new purchases, and declining trading volumes are making the altcoin market even more fragile. Additionally, increasing regulatory pressures from the U.S. and European authorities are further dampening investor sentiment.

For now, the market remains uncertain, and investors should closely monitor critical support and resistance levels. How TOTAL3 reacts around the $875 billion level will be a key factor in determining the direction of altcoins.

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Bitwise European Head of Research André Dragosch said in an interview with The Block:

“The appreciation of the dollar could limit bitcoin’s upside, as the historical performance of bitcoin tends to suffer during periods of dollar strength. Additionally, dollar appreciation often signals tighter global liquidity, which could be a headwind for bitcoin in the near term.”

“What is more is that our own quantitative models imply that the US Dollar is currently the most important macro factor with respect to the performance of Bitcoin and monetary policy as well as global growth expectations have become less important lately.”

According to TradingView, the U.S. dollar index rose from 103.42 to 105.93 on election day.

The Impact of Interest Rate Investors Lowering Rate Cut Expectations on Bitcoin

The recent macroeconomic developments can significantly impact Bitcoin by influencing investor risk appetite and market liquidity. When investors lower their expectations for interest rate cuts by the U.S. Federal Reserve, this supports the strength of the dollar. A stronger dollar can make alternative assets like Bitcoin less attractive, potentially dampening demand and slowing price growth.

Another factor to consider is the expectation that the Bank of Japan (BoJ) will raise interest rates. Such expectations have caused the yen to strengthen against the dollar. Similar shifts have previously led to market events like the unwinding of the yen carry trade in August, which triggered major liquidations in risk assets, including Bitcoin and the broader crypto market.

Data released last Friday showed that consumer prices in Tokyo rose for the first time in three months, reinforcing the likelihood of a BoJ rate hike in December. BoJ Governor Kazuo Ueda noted that Japan’s economy is moving towards wage-driven inflation and emphasized the need to avoid keeping borrowing costs too low.

These developments could further influence market dynamics, creating potential headwinds for Bitcoin’s price growth.

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During Asian trading hours on Friday, BTC jumped beyond $64,000; later, it somewhat dipped as the BoJ’s maintained policy served to stabilize markets, thereby preventing a repeat of July’s market turbulence following its unexpected rate rise.

Positive macroeconomic forecasts, according to market professionals, are encouraging optimism for more volatile assets like Bitcoin. Classic recession indicator, the inverted U.S. 2-year/10-year Treasury spread, has lately sharpened to +8 basis points, according to traders at QCP Capital. This points to a shift toward risk-on assets and more general market optimism.

Generally speaking, about future economic downfall, short-term debt displays more than long-term debt suggests. But the steepening points of the growing spread signal to a more positive view, hence lowering worries about a possible economic catastrophe.

Since Tuesday, open interest in Bitcoin has climbed almost $5 billion, suggesting fresh money entering the market as traders predict further volatility. Information using CoinGlass usually lured toward long positions, traders are driven by aggressive purchasing volume, which has always exceeded selling volume and suggests increasing confidence in continuous upward price momentum.

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Based on September’s historical volatility of Bitcoin, a month usually distinguished by quite random price fluctuations for the currency, bitfinex experts created their projection. They also mentioned that the predicted rate drop would “add another layer of complexity, maybe aggravating the volatility of the market.” They did agree, however, that this perspective may shift with macroeconomic conditions.

While many investors see Bitcoin as a more enticing option when interest rates are lowered as traditional assets like bonds offer lower returns, the status of the current economy is still undetermined. Set for September 18, the Federal Reserve’s interest rate decision echoes dovish remarks by Fed Chair Jerome Powell in August implying that “the time has come” for rate decreases.

At the time of writing, Bitcoin is trading for $56.450 down 5.18% over the last week. A 20% decline from its current price would push it to around $46,000, the level last seen in February. Early August saw Head of Research at 10xResearch Markus Thielen echo this, stating Bitcoin “needs to fall into the low 40,000s” before a new bull market can commence.

Other onlookers, like as Joe Consorti of The Bitcoin Layer, think $60,000 is more likely a stabilization zone where long-term holders are purchasing Bitcoin than a speculative peak. Bitcoin is now “fighting around its Bull Market Support Band,” claims bitcoin trader Daan Crypto Trades, and for now it is hesitant to go further in either direction.

As the Federal Reserve’s ruling approaches, market participants are preparing for what may be a turning moment in the price route of Bitcoin.

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A major indication of U.S. investor demand in comparison to elsewhere, the Coinbase Premium Index gauges the price differential of Bitcoin on Coinbase Pro and Binance. A positive number indicates purchasing pressure; a negative reading can point to a sell-off. Notably, the Coinbase Premium fell below -0.10 before Bitcoin’s price decline on “Crypto Black Monday” on Aug. 5.

Following remarks by Federal Reserve Chair Jerome Powell at the annual Jackson Hole conference, where he indicated that the cycle of interest rate decreases is approaching although he did not say exactly when they would start, the demand surged. Markets have paid great attention to Powell’s comments, and his signal of “appropriate dialing back of policy restraint” appeared to comfort investors.

Reacting quickly to the news, Bitcoin rose 5.46% from Aug. 22 to reach $64,000 at the time of publishing. The price moved momentarily to $64,769, a level not seen since Aug. 2.

The market has always seen sub-$60k Bitcoin as valued for the previous six months, notwithstanding swings, according to crypto expert Will Clemente, therefore highlighting the strength of present buyer desire.

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