First decision, already an earthquake: Warsh shakes the markets

This Wednesday, June 17, a macroeconomic turning point took place, symbolized by the capitulation of gold which lost more than 40 dollars per ounce, and by the fall of bitcoin below the threshold of 65,500 dollars. This reaction follows forecasts from the Fed, whose restrictive tone surprised investors who were hoping for easing.

The Fed's verdict and the shock of monetary projections

The meeting of the Monetary Policy Committee of the US Federal Reserve concluded with no change in the target range for federal rates, which remains at 3.50% – 3.75%, adopted unanimously (12-0).

However, the release of the economic projections chart has revealed an aggressive posture and a restrictive bias which immediately sent the markets into a tailspin.

Here are the views of the 18 Fed officials:

• 9 participants now project rate increases by the end of 2026, including 1 forecasting an increase of 75 basis points, 5 anticipating 50 basis points and 3 betting on 25 basis points;
• 8 members recommend a status quo to keep rates unchanged at their current level;
• Only 1 dissident foresees a single rate cut by the end of the year.

This inflection is the result of inflation which remains well above the historic target of 2% (the CPI energy index climbs to 4.2%, the highest in three years) and a median projection of rates for the end of the year which goes from 3.4% in March to 3.8%.

Before the announcement, Guggenheim expert Patricia Zobel had also warned investors by pointing out that “several members would make rate increases their base scenario” a fear materialized by the hardening of Jerome Powell's speech.

The financial mechanism of the gold capitulation

This change in circumstances immediately impacted traditional reserve assets, the first of which was gold, whose price fell more than 2% to close at around $4,260.10 per ounce. In macroeconomics, the prospect of a situation of persistently high interest rates increases the opportunity cost of holding precious metals, which distribute neither dividends nor coupons.

Thus, the yields on 10-year US Treasury bonds are tightening and flirting with 4.45%, driving the real rate of return above the zero line with a rate of around 0.25% when adjusted for inflation of 4.2%. This rise in real yields and the strengthening of the US dollar index (DXY), which rose 35 points after the Fed's press release, weighed heavily on commodities.

Furthermore, the massive disengagement of investors from precious metals was accelerated by the fall in the geopolitical risk premium in the Middle East. A proposed interim agreement between the United States and Iran to free the Strait of Hormuz has caused oil (Brent) to fall below $80 per barrel, depriving gold of its last short-term supports. The asset's upward momentum was broken by the effect between a strong dollar and easing global energy tensions, pushing fund managers to liquidate their positions in order to turn to the returns guaranteed by US government bonds.

The on-chain microstructure and the resilience of bitcoin

In this general liquidation market, bitcoin resisted by limiting its decline to around 1% to $65,417, thus breaking away from the correction in precious metals. If the main crypto still suffers the overall impact of risk aversion, we observe that its internal structure reflects a strong accumulation on the part of institutional investors.

Data from analytics platform Glassnode shows that the accumulation trend score remained stuck at its maximum of 1.0 for more than two weeks, a sign that large-scale entities took advantage of the decline to absorb available volumes. Nearly 259,000 BTC were thus accumulated in the price zone between $59,000 and $67,000, keeping the price at a level 10% higher than its local cycle low recorded on June 5 at $59,375.

To break the bearish technical structure marked by lower and lower highs, bitcoin will have to overcome the resistance of $ 83,000, a level that Benedict Kendrick, analyst at Standard Chartered, considers the essential pivot point to restart a sustainable bull market.

The evolution of underlying inflation remains the decisive criterion. If the planned signing of the Sino-US-Iranian memorandum of understanding this Friday helps stabilize energy prices, the Fed could tone down its aggressive rhetoric, paving the way for a rebound in cryptos. Conversely, if inflation persists despite falling crude oil prices, the resilience of crypto investors will continue to be tested by monetary tightening.