Fed protocol reveals rift: hawks demand rate hike, bitcoin under pressure
The minutes from the Federal Open Market Committee (FOMC) July meeting, released on Wednesday, shed light on the depth of divisions within the Federal Reserve. The decision to hold rates at 3.50–3.75% was not unanimous: three committee members — Beth Hammack, Neel Kashkari, and Lorie Logan — voted for an immediate quarter-point hike. This was a signal the market could not ignore.
Hawks Gain Momentum
Although the majority favored a wait-and-see stance, the rhetoric of the minutes is clearly tilted toward tightening. Many meeting participants made it clear that a further step up in rates is inevitable if inflation does not begin to slow sustainably. The Fed's inflation gauge stood at 3.7% in June — still significantly above the 2% target, giving the "hawks" substantial arguments.
Additional pressure comes from geopolitical risks in the Middle East, which could keep producer costs elevated for an extended period. At the same time, part of the committee noted that the effect of past rate hikes has largely been exhausted, while the rapid development of artificial intelligence could, on the contrary, reduce inflationary pressure in the future.
Warsh's Reform: Fewer Meetings — More Uncertainty
A separate item in the minutes concerns Chairman Kevin Warsh's proposal to reduce the number of FOMC meetings to six per year. Formally, no decision has been made, and the 2026 schedule remains unchanged, but the very fact of officially discussing this idea is significant. Warsh is already known for his brevity and rejection of "forward guidance," and reducing the number of meetings would make monetary policy even less predictable.
For the crypto market, this is a worrying signal. The price of bitcoin is historically sensitive to rate expectations. Fewer meetings mean fewer opportunities for planned position adjustments, but each decision will trigger sharper volatility spikes. The market will lose its familiar reference points, which in current conditions will only heighten nervousness.
Market on Edge
Already, traders are pricing in roughly a one-in-three chance of a rate hike in September, and an additional 25 basis point increase by December. High Treasury yields (5%) continue to lure capital away from risky assets, and this year gold has outperformed bitcoin in terms of returns.
Immediately after the minutes were released, bitcoin traded around $68,245, showing a daily gain of 5.3%. However, this local move does not negate the overall bearish backdrop. The key test will be the September 15–16 meetings, where it will become clear whether the "hawks" can push through a rate hike.
My analysis: The market underestimates Warsh's resolve. His push for less intervention and greater predictability actually creates the opposite effect — uncertainty becomes the main driver of volatility. For bitcoin, this means that periods of calm will be followed by sharp moves, and traders should prepare for a scenario where every Fed comment has a disproportionately strong impact on price.