Fed Further Tightening Could Increase Downward Pressure on BTC

As financial markets have largely factored in the Federal Reserve's 25-basis-point interest rate hike as a near-certain scenario, on-chain analyst Axel Adler Jr. has warned that further signals of tightening could increase downward pressure on both equities and Bitcoin. In his blog post, he noted that CME FedWatch indicates a 92.7% probability of a 25-bp rate hike, with rates expected to rise to 3.75-4.00%. Historical data shows that in seven instances since 1988 when the Fed began an interest rate hiking cycle, the S&P 500 declined six weeks after the first increase in five cases, with an average return of -2.83% across all seven cycles. However, market movements following such hikes depend on how long the tightening period lasts and the economic conditions at the time. Adler Jr. emphasized that while rate increases have already been largely priced into markets, the Fed's future signals regarding additional hikes will be critical. Stronger-than-expected tightening signals could impose further pressure on both stocks and Bitcoin.