Warsh's First FOMC Holds Rates, but Nine of 18 Now See a Hike
The Federal Reserve left its benchmark rate unchanged at 3.50%–3.75% on Wednesday, the first policy decision under new Chair Kevin Warsh. The hold was expected: after May inflation data landed in line with forecasts the prior week, markets had priced roughly 98% odds of no June move, according to CoinDesk. What repriced assets was the set of quarterly projections released alongside the statement, which showed nine of eighteen policymakers now expecting at least one rate increase before the end of 2026, up from none in March. Bitcoin slipped from about $66,000 to $64,800 in the minutes after the release before stabilizing near $65,300.
The Dot Plot: Nine of Eighteen Officials Now Expect a Hike
The dot plot, the chart on which each Fed official marks an anonymous dot for where they expect the policy rate to sit at the end of each year, carried the news rather than the decision itself. In March, not one of the eighteen participants projected a higher rate by the end of 2026. On Wednesday, half of them did. The median dot for year-end 2026 moved up by four tenths of a percentage point, and the committee's inflation forecasts were revised sharply higher across the board.
- Median year-end 2026 rate projection: 3.8%, up from 3.4% in March
- Median projections for 2027 and 2028: 3.6% and 3.4%
- 2026 PCE inflation forecast: 3.6%, up from 2.7%
- 2026 core PCE forecast: 3.3%, also up from 2.7%
- Officials projecting at least one 2026 hike: nine of eighteen, up from none
The Inflation Revision: Forecasts Up Nearly a Full Point
The upward revisions to the 2026 PCE and core PCE forecasts, nine tenths and six tenths of a percentage point respectively, are the mechanism behind the hawkish dots. PCE, the price index the Fed targets rather than the more widely quoted consumer price index, is now projected by the committee to run at 3.6% this year, well above its goal. That revision arrived despite a benign May inflation report on June 10, in which headline CPI rose 0.5% month over month and 4.2% year over year as expected, while core CPI came in at 0.2% against expectations of 0.3%, CoinDesk reported. Rate pricing had already begun shifting toward a 25 basis-point increase by year-end before this meeting, CoinDesk reported at the time; the projections confirmed that the committee itself had moved the same way.
The Reaction: A $1,200 Drop and a Partial Recovery
Bitcoin's response was contained relative to the month it has had. It recovered about $500 of the $1,200 fall within the session, leaving the price near $65,300 and still below the $65,878.93 level at which it opened in late February. Equities moved the same way, with the S&P 500 and the Nasdaq 100 each about 1% lower. Parts of the altcoin market moved the other way on the day: UNI rose 22.5% to $3.53 after Standard Chartered initiated coverage with a target of $100 by 2030, according to CoinDesk, while HYPE gained 7.8% on the day and 34.3% on the week, ether traded at $1,793 for a 10.4% weekly gain and solana added 14.7% over the week.
The On-Chain Counterpoint: 125,000 BTC Absorbed in Two Weeks
Chain data points away from long-term owners as the source of the selling. Wallets classified as long-term holders absorbed roughly 125,000 BTC over the first half of June, and the balance held on exchanges fell by about 80,000 BTC since February to 2.71 million BTC, a shift that reduces the supply sitting where it can be sold immediately. That pattern sits awkwardly beside a spot price that broke below $60,000 earlier in the month, and suggests the marginal seller has been the leveraged and fund-flow side of the market rather than the cohort that holds through drawdowns. Whether it holds depends on what the committee does with the path it has just sketched. Nine dots are a forecast rather than a decision, and the projection will not be tested until the inflation prints that follow it either confirm the 3.6% PCE path or undercut it.