The split vote, led by two Trump-appointed officials, signaled internal Fed pressure that analysts say could boost crypto’s inflation hedge appeal
Bitcoin and other major cryptocurrencies rebounded Thursday after the Federal Reserve voted to keep interest rates unchanged, with two Trump-appointed officials motioning in favor of a rate cut.
The Fed held its benchmark rate steady at 4.25% on Wednesday, with Chair Jerome Powell emphasizing a continued focus on inflation rather than political or economic pressure to ease borrowing costs.
The decision initially triggered a sharp sell-off in the crypto market, with BTC dropping to $116,000 and similar losses seen in ETH, XRP, and SOL.
However, by Thursday, prices had recovered, with Bitcoin trading above $118,000 and the CoinDesk 80 Index up 0.8% over 24 hours.
Analysts see political pressure as a bullish factor for hard assets
According to CoinDesk, the recovery followed growing investor attention to the unusual dissent within the Fed.
Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller, both appointed by President Donald Trump, voted as expected against holding rates steady, instead supporting an immediate rate cut.
The internal split highlighted rising concerns over the central bank’s independence, an issue analysts say may reinforce crypto’s long-term case as a hedge against inflation and political instability.
Jimmy Yang, co-founder of crypto options platform Orbit Markets, told CoinDesk that the dissent could mark a shift in how investors perceive central bank policy risks.
“There are increasing concerns about the Fed’s independence,” Yang said. “This should strengthen the case for crypto in the long term”.
For its part, Greg Magadini, director of derivatives at crypto analytics firm Amberdata, said that any erosion of Fed independence could drive capital into hard assets like Bitcoin.
“If Powell is fired or begins to cut rates too early, I expect BTC to rally significantly,” he said, noting that inflation and bond values could simultaneously deteriorate.
Crypto investors eye July CPI and long-term inflation narrative
Looking ahead, the market is awaiting new inflation data, with the July consumer price index (CPI) due next month.
Traders are closely watching for signs that tariffs could begin to raise consumer prices, which could reignite inflation concerns.
This scenario could complicate Fed policy and renew interest in cryptocurrencies to buy as a hedge against inflation and weakening fiat value.
Yang noted that if tariffs begin to push prices higher, cryptocurrencies could temporarily fall alongside other risk assets. However, he added, “if inflation fears persist, crypto might rebound as a hedge narrative re-emerges,” with CPI “likely to rise when the tariffs kick in over the next few months”.
