Tearudklans told Cointelegraph that the elevated volatility indicates that traders are pricing in divergent outcomes, including the possibility of fiscal contraction alongside stable or easing interest rates.“This creates a complex feedback loop where reduced government spending could limit growth, potentially forcing the Fed to maintain a cautious stance or even delay future rate cuts.”Bitcoin’s price action may also be tied to policy misalignment, he added.“While the Fed’s rate decision offers short-term clarity, the broader fiscal outlook introduces the risk of asymmetric market responses, reinforcing Bitcoin’s sensitivity to macroeconomic cycles and liquidity shifts.”The volatility of Bitcoin comes as President Trump has expressed overtures to the crypto community.
The volatility reflects heightened market uncertainty amid structural unknowns in the US economy, according to Uldis Tearudklans, chief revenue officer at UK-based cryptocurrency exchange Paybis.“The policy landscape is becoming more complex with the emergence of Elon Musk’s Department of Government Efficiency,” Tearudklans said.“While the initiative to reduce government spending has bipartisan backing, the broader economic effects — particularly on employment and consumer demand — remain difficult to quantify.”The Department of Government Efficiency claims to have generated an estimated savings of $115 billion for the US government as of March 19.
Source: CoinGlassAccording to Tearudklans, if fiscal tightening proceeds alongside stable or gradually declining interest rates, the resulting liquidity contraction “could create a mismatch in policy direction, limiting the intended stimulative effect of future rate cuts.”On March 19, the Federal Open Market Committee announced that it would leave interest rates unchanged for the time being, although it left open the possibility for two more rate cuts in 2025.
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Author / Journalist: Cointelegraph by Christopher Tepedino
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