The Federal Reserve’s April meeting minutes, released Wednesday, laid bare the deepest internal split in three decades — four policymakers dissented, the most since 1992 — while a majority of participants said some degree of further tightening would likely become appropriate if inflation remained persistently above the 2% target. The Fed held its benchmark rate steady at 3.50% to 3.75%, but the hawkish language shift is already reshaping the outlook for risk assets: by May 20, CME FedWatch showed a 54.1% probability of a rate hike by December and just a 1.5% chance of any easing, a complete reversal from earlier expectations of cuts.
April minutes: a committee pivoting right
The April 28–29 meeting was the first under incoming Chair Kevin Warsh, who succeeded Jerome Powell with the committee repositioning around a more hawkish center of gravity. Several participants wanted to remove the easing-bias language from the official statement altogether, according to the minutes. The shift was driven largely by the Iran situation, which pushed energy prices above $110 a barrel and lifted inflation measures above 3%. April CPI came in at 3.8%, well above the Fed’s target.
The 10-year Treasury yield hit 4.54% on May 15, a 12-month high, as the repricing of rate expectations accelerated.
Why the hawkish turn hits Bitcoin hardest
Bitcoin's sensitivity to Fed policy is primarily about liquidity. Expected rate cuts make money cheaper and support risky assets like Bitcoin; expected hikes do the opposite. Coinbase analysts noted that a sustained expansion in Bitcoin's price range would likely require either a clear improvement in systemic liquidity or a definitive downward trend in inflation — neither of which is in sight right now. The historical precedent is stark: during the 2022 hiking cycle, Bitcoin fell from roughly $69,000 to $15,500 as the Fed raised rates from near zero to above 5%.
Nearly $1 billion fled Bitcoin ETFs in one week
The week of May 15, the combination of Iranian escalation, rising Treasury yields, and surging rate-hike odds triggered nearly $1 billion in Bitcoin ETF outflows, snapping a six-week inflow streak. That suggests institutional investors are already repositioning for a tighter monetary environment.
A test for risk assets as December looms
With the next Fed meeting scheduled for mid-June, the market will watch closely for any further hardening of the language. The CME FedWatch data already implies a coin-flip chance of a hike by year-end, and the odds of any easing are effectively zero. For crypto traders, the liquidity tap isn’t turning off — but it’s no longer expected to open wider anytime soon.
