The Federal Reserve (FED) maintains the Intrerest Rate unchanged, with hidden variables in the crypto market during a calm period.

The Federal Reserve announced on Wednesday (June 18) that it will maintain the benchmark Intrerest Rate at the 4.25%-4.50% range, marking the fourth consecutive meeting where the rate remains unchanged, in line with market expectations.

Despite The Federal Reserve (FED) indicating that uncertainty regarding the economic outlook has diminished, it remains at a relatively high level. The Federal Reserve (FED) has revised down its 2025 US GDP growth forecast to 1.4%, while raising its inflation expectations to 3%, reflecting its dilemma between economic recovery and inflation control.

The Federal Reserve's "dot plot" shows that two rate cuts (a total of 50 basis points) are expected in 2025, consistent with the March forecast. However, the expectation for rate cuts in 2026 has been revised down from two to one (only 25 basis points). Notably, among the 19 Federal Reserve officials, 7 believe that there will be no rate cuts in 2025, reflecting internal disagreements on the future policy path.

The crypto market appears calm on the surface, but internal fluctuations are significant.

Despite the significant impact of The Federal Reserve (FED) decisions on global financial markets, the crypto market has reacted lukewarmly. Bitcoin (BTC) remains around $104,000, Ethereum (ETH) fluctuates near $2,520, and XRP and Solana are also mostly flat.

However, data shows that the total market value of the crypto market slightly decreased by 2% to $3.35 trillion on that day, with $224 million in leveraged liquidations, the largest being Ethereum, followed by Bitcoin. This indicates that the internal battle between bulls and bears in the market remains intense.

It is worth mentioning that the US spot Bitcoin ETF recorded a net inflow of $216 million on June 17, and the spot Ethereum ETF also saw an inflow of $11 million, indicating that institutional funds continue to enter the crypto market, providing support for the market bottom.

Analysis suggests that the market's calm response reflects investors' cautious attitude following The Federal Reserve (FED) decision, waiting for clearer macroeconomic signals.

Political factors influence market judgment

On the day of the Federal Reserve meeting, a prominent political figure publicly criticized Federal Reserve Chairman Jerome Powell again, calling him "stupid" and predicting that the Federal Reserve would not cut interest rates. This individual has long criticized Powell, accusing his policies of "costing the country a lot of money." He believes that Europe has cut interest rates 10 times, while the U.S. has not done so even once, and questions Powell's political stance.

Although these political remarks have raised concerns, they do not seem to have a direct significant impact on the crypto market at present, as the market is more focused on the economic data itself.

Crypto Market Under Global Tension

The CEO of a certain cryptocurrency company pointed out that despite the tense global situation over the past week, cryptocurrency prices have remained relatively unchanged. Bitcoin continues to fluctuate within a narrow range around $105,000, with a daily volatility of less than 2.1%, and there has been no large-scale panic selling.

However, he warned not to ignore the escalating macro risks. If geopolitical tensions worsen or start to impact the financial system, the crypto market will not be spared. He noted that Bitcoin's market dominance has approached 66%, indicating that investors' risk appetite for small-cap encryption currencies is decreasing in the current environment.

On-chain data reveals the enhanced scarcity of Bitcoin

On-chain data provides interesting market insights. Data from a certain DeFi solution provider shows that the market value of Bitcoin relative to its realized value (MVRV Ratio) is currently still below the historical market peak. The MVRV Ratio is 2.25; although the market value is more than twice the realized value, it is significantly lower compared to past cyclical peaks, indicating that the market has not yet overheated and that Bitcoin may still have room for growth.

Another research report indicates that the "ancient supply" of Bitcoin (Bitcoin that has not been moved for at least ten years) is growing faster than the daily issuance of new Bitcoins. Since April 2024, an average of 566 Bitcoins has entered the "over ten years" unspent queue each day, exceeding the daily circulation of 450 new Bitcoins mined.

The "old supply" currently accounts for more than 17% of all mined Bitcoin, valued at approximately $360 billion. The report also mentioned that the "HODL rate" (old supply inflow minus new issuance) will turn positive in April 2024, with an average increase of 116 Bitcoins per day, confirming that core holders are absorbing circulating Bitcoins at a faster rate than miners produce.

It is expected that by 2035, the "old supply" of circulating Bitcoin will exceed 30%. Although scarcity does not directly guarantee price increases, the continuous increase in the Bitcoin held by long-term holders will tighten the amount of Bitcoin available for trading, making price discovery increasingly reliant on marginal flows.

The report summary concludes that Bitcoin has now distinguished itself from commodities with elastic supply. Its scarcity, combined with factors such as long-term holding and lost tokens, is expected to strengthen over time. If future demand grows in sync, this characteristic may reshape its value discovery logic, becoming a core advantage that sets it apart from other assets.