On this day of an FED rate hike, the first since 2023, BTC is sending a fairly negative short-term signal.

The Bull Index score has flipped back into a bearish regime. In the space of a week, the indicator went from a bullish regime with a score of 80 to 30, a fairly pessimistic regime.

Demand is not showing up, and the profits held by the shortest-term holders are starting to dry up.

With this FED move, accompanied by a broadly hawkish tone and still no real guidance, markets are pulling back. A risk-off environment is settling in.

The question is how long it will last, and according to the FED, inflation will be the main driver going forward.

Over the evening, BTC pulled back very slightly by 0.42%, while the S&P and Nasdaq fell 0.8%. Logically, the bond market followed the rate hike, with the US2Y printing an incredible 2.9% move and the US10Y at 1.6%.

A decision that wasn't entirely clear on every front. It was accompanied by a fairly short press conference from FED Chair Warsh, with direct answers that sometimes only addressed part of the questions asked.

For now, the market is responding by demanding an even higher risk premium. Some positions may end up being unwound given the lack of short-term investment prospects.

While this tightening of liquidity suggests it will slow growth, consumption, and therefore inflation, it could also have an unintended effect.

Some companies will be forced to raise the price of their products due to higher credit and investment costs, at a time when they were already struggling with rising energy prices from ongoing conflicts, not to mention tariffs.

In short, a decision which doesn’t have unanimous support among economists, and one that won't be without short-term consequences.

Written by Darkfost