The post FED’s Tight Policy Threatens Altcoin Season Amidst Political Turmoil appeared on BitcoinEthereumNews.com.

Altcoins Cryptocurrency analyst Simean Koch warns that the U.S. Federal Reserve’s (FED) tight monetary policy poses a significant threat to the altcoin market, though it hasn’t entirely extinguished hopes for a future altcoin season. This comes amidst escalating public conflict between U.S. President Donald Trump and FED Chairman Jerome Powell over interest rate policy. President Trump continues to sharply criticize Powell, recently stating, “I don’t think he’s an intelligent person… He’s just stupid.” Trump advocates for lower interest rates to bolster economic recovery and manage public debt. However, Powell remains steadfast in his commitment to keeping rates high to combat inflation. The FED’s latest decision, announced last night, held the interest rate steady at 4.5%, marking the fifth consecutive unchanged decision since December 2024. Koch’s analysis emphasizes the risk of stagflation – a concerning scenario of simultaneous economic stagnation, high inflation, and unemployment – facing the U.S. economy. In such an environment, the FED’s policy options are severely limited, as rate hikes could worsen unemployment while cuts might fuel inflation. While Trump points to the Eurozone’s recent rate cuts (from 4.5% to 2.15%) as an example, the U.S. has only managed to reduce rates from 5.5% to 4.5%. The prevailing high interest rate environment poses a substantial challenge for cryptocurrencies, particularly altcoins. Historically, altcoin bull markets have flourished during periods of low interest rates, such as the surges in 2017 and 2021. Current rates, however, are even higher than those periods. Furthermore, the FED’s ongoing balance sheet reduction, known as quantitative tightening, actively shrinks market liquidity, making it difficult for altcoins to gain traction. According to Powell’s projections, the FED’s transition to balance sheet expansion, which could aid altcoins, might not occur until 2028 at the earliest, contingent on interest rates dropping to zero. Koch also highlights a concerning trend:…

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Filed under: News - @ June 22, 2025 4:02 am