What You Need to Know:

• Bitcoin was priced over $96,000 following the Fed’s announcement, marking a 1.6% increase in 24 hours. Other cryptocurrencies like XRP and AVAX reported slight losses.
• The Federal Reserve’s policy statement highlighted escalating risks of inflation and unemployment, often linked with stagflation.
• Analyst Zach Pandl from Grayscale projected Bitcoin could thrive in such an environment.

The Federal Reserve is becoming increasingly cognizant of stagflation risks—a challenging combination of decelerating growth and rising inflation which could create hurdles for policymakers.

Chair Jerome Powell maintained that the economy is in “good condition” while emphasizing the central bank’s readiness to evaluate further actions. However, recent changes in the Fed’s policy statement indicate a growing concern about the economic outlook.

Maintaining its primary interest rate, the U.S. central bank recognized the increasing risk of inflation and unemployment—essentially defining stagflation, a phenomenon last notably experienced in the 1970s. This scenario could constrain the Fed’s options to invigorate a languishing economy without exacerbating inflation.

The Fed is concerned about stagflation, Zach Pandl tweeted following the announcement. “We believe this scenario would be advantageous for Bitcoin,” he stated, citing prior analysis that links rising tariffs to stagflation, which traditionally harms conventional assets but benefits limited-value stores like gold.

Bitcoin traded within a narrow range post-announcement. It briefly rose to $97,500 before re-adjusting to $96,500 after a 1.6% day’s gain.

The CoinDesk 20 Index noted a slight 0.3% gain during this timeframe, hindered by 1%-3% declines in assets like XRP, AVAX, and UNI. Meanwhile, equity markets saw a slight recovery, with the S&P 500 and Nasdaq up by 0.4% and 0.3%, respectively.

For further updates, stay tuned.