SKN | Bitcoin Slides to $66,000 as Fed Minutes Signal Potential Rate Hike, Pressuring Risk Assets

Bitcoin fell to approximately $66,000 after the latest Federal Reserve minutes revealed that policymakers discussed the possibility of additional rate hikes should inflation remain persistent. The pullback coincided with a loss of momentum in U.S. equities, underscoring the renewed sensitivity of risk assets to macroeconomic tightening signals.

The move highlights how digital assets remain closely tethered to monetary policy expectations, particularly as institutional participation in crypto markets continues to deepen.

Market Reaction: Risk Assets Reprice on Hawkish Signals

Bitcoin declined roughly 3%–5% intraday following the release of the minutes, extending weekly losses and bringing total drawdown from recent highs into the double digits. Ether mirrored the move, slipping below key technical levels, while broader crypto market capitalization shed billions in value.

In traditional markets, major U.S. indices such as the S&P 500 and Nasdaq Composite pared earlier gains and closed modestly lower, as Treasury yields ticked higher. The 10-year U.S. yield climbed toward recent highs, reflecting recalibrated expectations around the path of policy rates.

Crypto derivatives data showed an uptick in liquidations across leveraged long positions, while funding rates normalized from previously elevated levels. The rapid repricing suggests that speculative positioning had leaned bullish heading into the release, leaving the market vulnerable to hawkish surprises.

Monetary Policy and Liquidity Implications

The Federal Reserve minutes indicated that several officials remain concerned about sticky inflation and are prepared to maintain restrictive policy for longer than markets had anticipated. For crypto investors, this reinforces a critical macro dynamic: digital assets often thrive in periods of expanding liquidity and struggle when financial conditions tighten.

Higher interest rates raise the opportunity cost of holding non-yielding assets such as Bitcoin, while also strengthening the U.S. dollar—another headwind for globally traded digital tokens. Institutional allocators increasingly view Bitcoin within a broader risk-asset framework, aligning its performance more closely with growth equities and other liquidity-sensitive instruments.

Investor Sentiment: Defensive Positioning Emerges

Market sentiment indicators showed a shift toward caution following the Fed’s remarks. Options markets reflected increased demand for downside protection, with implied volatility rising modestly in short-dated contracts.

At the same time, spot Bitcoin ETF flows remained relatively stable, suggesting that long-term allocators have not materially reduced exposure. This divergence between short-term traders and strategic investors underscores a maturing market structure, where different participant classes respond differently to macro shocks.

• Short-term traders adjusted leverage and trimmed exposure.
• Institutional holders maintained core allocations.
• Derivatives markets reflected increased hedging activity.

The interplay between these groups will likely determine near-term volatility levels.

Looking ahead, Bitcoin’s trajectory will hinge on upcoming inflation data, employment figures, and any further commentary from Federal Reserve officials. Should macro indicators soften, expectations for renewed easing could resurface, potentially stabilizing risk assets. Conversely, persistent inflation pressures may extend the period of restrictive policy, keeping digital assets range-bound or under pressure. For sophisticated crypto investors, the evolving balance between monetary policy, liquidity conditions, and institutional flows remains central to assessing the next phase of market direction.