{"id":11532,"date":"2025-09-23T14:39:20","date_gmt":"2025-09-23T14:39:20","guid":{"rendered":"https:\/\/bitunikey.com\/news\/the-silent-winner-of-the-feds-tightrope-act\/"},"modified":"2025-09-23T14:39:23","modified_gmt":"2025-09-23T14:39:23","slug":"the-silent-winner-of-the-feds-tightrope-act","status":"publish","type":"post","link":"https:\/\/bitunikey.com\/news\/the-silent-winner-of-the-feds-tightrope-act\/","title":{"rendered":"The silent winner of the Fed\u2019s tightrope act"},"content":{"rendered":"
\n

The Federal Reserve cut rates by 25 basis points, lowering the target range to 4.0\u20134.25%. <\/p>\n

Powell said<\/a> it was \u2018another step toward a more neutral policy stance\u2019 and that policy was \u2018not on a preset course\u2019\u00a0\u2014 framing the move as a temporary adjustment to shifting conditions rather than the start of a full pivot.<\/p>\n

But the move came with inflation running above target for more than four years straight \u2014 the longest stretch since the late 1990s. And according to the Fed\u2019s own September 2025 projections<\/a>, PCE inflation is expected to remain above 2% until 2028, while the federal funds rate is forecast to decline from 3.6% in 2025 to 3.1% in 2027. Normally, higher rates are used to tame persistent inflation, but the Fed is charting a path of loosening policy instead.<\/p>\n

Summary of Economic Projections | Source: Federal Reserve, September 2025<\/figcaption><\/figure>\n

From hawkish pledges to capitulation<\/h2>\n

Only weeks earlier at Jackson Hole, Powell wrapped himself in hawkish feathers, pledging<\/a>: \u201cCome what may, we will not allow a one-time increase in the price level to become an ongoing inflation problem.\u201d <\/em>That was supposed to be a red line, yet Powell has erased it himself with this cut. He called it risk management, but in reality it looks more like surrender. Of course, Powell defended the move, but markets heard dovishness, and risk assets surged.<\/p>\n

Excess liquidity masks real risk<\/h2>\n

The credit market makes the absurdity blindingly obvious \u2014 junk debt trades like blue chips, as if risk had vanished. The U.S. high-yield spread \u2014 the extra yield investors demand to hold risky corporate debt instead of safe Treasuries \u2014 has collapsed<\/a> to just 2.9%, near cycle lows, while CCC-rated junk debt, the riskiest tier, has fallen<\/a> from 11.4% in April to only 7.9% today. Equity volatility remains muted: the Cboe Volatility Index (VIX) \u2014 Wall Street\u2019s \u2018fear gauge\u2019 that tracks expected 30-day volatility in U.S. equities \u2014 is hovering<\/a> near 16, well below its long-term average.<\/p>\n

Even the Fed\u2019s own gauge confirms it: the Chicago Fed\u2019s National Financial Conditions Index (NFCI) stands at<\/a> \u20130.56, signaling liquidity conditions looser than historical norms.<\/p>\n

Institutions choose the Fed-independent hedge<\/h2>\n

Since March 2021, when inflation first breached the Fed\u2019s 2% target, U.S. equities have soared. The Wilshire 5000 \u2014 the index tracking the entire stock market \u2014 now carries<\/a> a market capitalization of about $66 trillion, up nearly 65% over the period.<\/p>\n

But while equities have floated higher on Fed-supplied liquidity, Bitcoin has done even better, more than doubling in price over the same stretch \u2014 and unlike equities, Bitcoin\u2019s appeal is anchored precisely in being outside the Fed\u2019s orbit.<\/p>\n

Bitcoin jumped to $117,000 on Sep 18, immediately after the Fed\u2019s cut, but then retraced, weighed down by profit-taking, futures liquidations, and heavy options positioning. According to Glassnode<\/a>, Bitcoin options open interest has surged to a record 500,000 BTC, with the September 26 expiry set to be the largest in history, amplifying short-term volatility.<\/p>\n

Even as prices pulled back post-cut, institutional demand appeared resilient. Between September 18 and 22, Glassnode data shows<\/a> that U.S. spot Bitcoin ETFs absorbed more than 7,000 BTC (nearly $850 million at prevailing prices). The result is that Fed\u2019s uncertainty fuels more institutional activity \u2014 strengthening, not weakening, Bitcoin\u2019s foothold.<\/p>\n

A house divided against itself<\/h2>\n

Inside the Fed, the scene evokes the old warning \u2014 a house divided against itself cannot stand. September\u2019s vote was the second meeting in a row without unanimous support, with seven of nineteen policymakers penciling in fewer cuts. The arrival of Stephen Miran on the Fed Board only added to the discord. A former strategist at Hudson Bay, an investment firm that traded FTX bankruptcy claims, Miran was the only governor who pushed for a sharper 0.5% cut. Although he failed to sway colleagues and Powell emphasized the committee acted with \u2018a high degree of unity,\u2019 the arrival of a policymaker with digital-asset experience and a bias toward looser liquidity conditions is unlikely to be without consequence.<\/p>\n

Closing thought\u00a0<\/h2>\n

Powell himself admitted<\/a>: \u201cThere are no risk-free paths now. It\u2019s not incredibly obvious what to do.\u201d This lack of clarity is a risk on its own \u2014 one market wouldn\u2019t hesitate to read as uncertainty and exploit. In this light, decentralized alternatives look far more credible, and Bitcoin offers the hedge investors need against both inflation and the monetary policy politicization. And while Powell calibrates, investors are shifting toward assets that don\u2019t live or die with every wobble of Fed policy choices.<\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

The Federal Reserve cut rates by 25 basis points, lowering the target range to 4.0\u20134.25%. Powell said it was \u2018another step toward a more neutral policy stance\u2019 and that policy…<\/p>\n","protected":false},"author":1,"featured_media":11533,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-11532","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency"],"_links":{"self":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/11532","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/comments?post=11532"}],"version-history":[{"count":1,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/11532\/revisions"}],"predecessor-version":[{"id":11534,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/11532\/revisions\/11534"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media\/11533"}],"wp:attachment":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media?parent=11532"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/categories?post=11532"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/tags?post=11532"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}