The Fed Is Turning Hawkish. What Does That Mean for Bitcoin and Strategy?

**Zach Pandl** (0:00)
I think some of it can only be explained by the coming and going of speculative activity. Both gold and Bitcoin, to me, have very strong fundamental foundations.
And that has to do with this deficit and debt imbalance that's not gonna go anywhere for a long period of time. So I would encourage investors that have longer time horizons to look at these types of markets, look at these types of drawdowns when retail speculative activity has been washed out. Maybe it's the time to be looking at allocating to both of these assets. I personally think that gold and Bitcoin both look pretty good here. And a lot of that speculative access has come out at this point.

**Steven Ehrlich** (0:43)
Hi everyone, welcome to another episode of Bits and Bips, the interview. My name is Steve Ehrlich. I am the head of research at SharpLink and also your host.
And we have a ton to talk about today. We just got a Fed rate decision, a whole lot more. But before we do, just a couple of quick notes.
One, as always, nothing that you hear or see on this program should be considered investment or financial advice. For full disclosures, please see unchaincrypto.com/bits and bips. And secondly, let's take a brief pause to hear from one of the sponsors who makes this show possible.

**SPEAKER_3** (1:16)
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**Steven Ehrlich** (2:35)
All right, welcome back. So a lot going on right now. We're in a week where it looks like there might be a long-term permanent, hopefully permanent ceasefire of the Strait of Fomous and equities are up. But gold and Bitcoin had been on a little bit of a wild ride.
But the most important thing that has happened is we just got a Fed rate decision. It's two o'clock and Kevin Warsh just finished his first meeting. And Zach, I didn't introduce our host. I forgot to do that. I just realized.
I'm here with Zach Pandl, the head of research at Grayscale. Zach is a repeat guest on the show. He's a former senior economist at Goldman Sachs and, frankly, the perfect guest to have on this week to break down everything that has happened in Kevin Warsh's, after Kevin Warsh's first meeting as Fed chair. So Zach, with that very unprofessional introduction, welcome to the show. And well, why don't you break down what we just learned?

**Zach Pandl** (3:37)
Yeah, thanks, Steve. Always great to be on a couple of heads of research talking about the Fed and crypto. Sounds like a great time to me. Yeah, as we're jumping on, we're just getting the FOMC statement and their projection materials. That I would say it's a pretty big surprise, actually. And unfortunately for our asset markets, maybe an additional headwind for the short term.
The main news is that the FOMC had been guiding towards lower rates for quite some time.
What Fed watchers will call an easing bias in the statement. So the post meeting statement explicitly talked about further rate cuts. They have pulled that easing bias out of the statement. So the FOMC is saying, at least as a group, they have no necessarily tendency to hike or cut rates at any time soon. And this is a big shift on the back of inflation. We should talk about that, what they're reacting to and the changes to their inflation forecast. But removing the easing bias, the big news here. And then the other closely related things is quite a number of Fed officials now writing down a rate hike in the dot plot projections that came with the official statement. So markets now pricing in a full rate hike for the Fed this year. That doesn't mean it's going to happen. But there's been a big swing in expectations for the Fed in the run up to this meeting and continuing them now. So higher rates, I expect this to be somewhat negative for risky assets, including crypto, and somewhat positive for the dollar short term.