The Potential Impact of the Fed Decision on Bitcoin
According to Carlo Pruscino, an analyst at CMC Markets, “the upside target that traders have in mind is $112,000 for Bitcoin, which is the psychological threshold.” An unexpected rate cut by the Fed could therefore allow Bitcoin to reach this level.
Currently, Bitcoin is trading around $103,766, after nearly touching $112,000 on May 22. However, most market participants expect the Fed to keep its rates unchanged at its meeting on June 18.
While the Fed could influence BTC with an anticipated rate cut, the expansion of the money supply (M2) is already boosting risk assets, with the MSCI ACWI index rising by 22% despite fragile growth.
Moreover, the ECB has reduced rates eight times, the BOJ is expanding its balance sheet, and China is incurring more debt to stabilize its economy. In the US, despite a hawkish tone, the Fed is injecting liquidity through reverse repos, SOMA reinvestments, and Treasury interventions.
A “reverse repo” is an operation where the Federal Reserve (or a central bank) sells securities to financial institutions with an agreement to buy them back later. This helps temporarily remove liquidity from the system to control interest rates.
So, is there a chance of seeing the FED easing its rates soon?
Key Factors to Watch
- Trade Tensions: The Fed’s decision will be influenced by the uncertainty surrounding the Trump administration’s trade policies. Pruscino emphasizes that despite the availability of economic data, trade tensions remain a critical factor.
- Employment Report: The US employment report on June 6 will be a key indicator for the Fed’s decision and the short-term evolution of Bitcoin’s price. A high number of new jobs could indeed delay any rate cuts.
In a tweet on June 1, 2025, macro expert @onechancefreedm reveals that global liquidity, up by +8% over a year, is boosting markets, including Bitcoin.
However, @onechancefreedm points out that this rebound is not organic. It is not a result of monetary policy success, but a “monetary illusion”, where capital seeks return and velocity. Markets are rising, despite stretched valuations, thanks to these flows.
In summary, the Bitcoin market remains tied to the decisions of the Fed and global economic events that could influence the cryptocurrency’s price. An unexpected rate cut could propel Bitcoin to new highs, but surprises on the employment front or trade tensions could also delay this possibility.
Since June 1, 2025, global money supply has grown by +8% over a year, compared to marked contraction in 2022 (-4%). Historically, such an acceleration of M2 boosts risk assets. This was seen in 2016-2017 (+14%, equities rally) and 2020-2021 (+22%, general bull run).
In today’s summary:
- Global Equities: ACWI surges from 723 to 884, a +22% increase, despite fragile economic growth.
- Liquidity Injections: The ECB has cut rates eight times, the BOJ is expanding its balance sheet, and China is borrowing more to stabilize its economy. In the US, despite a hawkish stance, the Fed is injecting liquidity through reverse repos, SOMA reinvestments, and Treasury interventions.
- Impact: This liquidity favours equities, cryptos (Bitcoin, Ethereum, altcoins), and high-yield emerging debt, driven by a dominant dollar amid the Fed/ECB gap.
Two crucial questions arise:
- Will the Fed follow the global easing or maintain its firmness, risking pressure on the dollar?
- Is this M2 expansion sustainable or temporary, tied to political and monetary reactions?
Crypto investors will need to pay attention to the signals sent by the US central bank in the coming weeks.
