BTC could face more downside if Fed signals further tightening: Axel Adler Jr

With financial markets largely pricing in a 25-basis-point rate hike by the U.S. Federal Reserve’s Federal Open Market Committee, on-chain analyst Axel Adler Jr said stronger-than-expected signals of further hikes could increase downside pressure on stocks and BTC. In a blog post, Adler said CME FedWatch showed a 92.7% probability of a 25-basis-point hike, with rates expected to rise to 3.75%-4.00%. Since 1988, there have been seven cases in which the Fed began a rate-hike cycle, and in five of those cases the S&P 500 fell six weeks after the first hike, Adler said. The average return across all seven cases was -2.83%. Adler added that the market’s path afterward varied depending on how long tightening lasted and on economic conditions at the time. With the rate hike itself already substantially priced in, Adler said the key question is what signal the Fed sends about additional hikes ahead. If the Fed delivers a stronger tightening signal than expected, extra pressure could be put on stocks and BTC.