Federal Reserve Policy and Market Impact in 2026
U.S. President Donald Trump officially nominated former Federal Reserve governor Kevin Warsh to the post of Chair of the Federal Reserve on January 30, 2026. Markets anticipated Warsh's policy stance to involve interest rate cuts paired with aggressive balance-sheet reduction, leading to uncertainty in the broader crypto market.
Throughout 2026, the Federal Open Market Committee (FOMC) has maintained interest rates between 3.50% and 3.75% for five consecutive decision periods. The next FOMC meeting is scheduled for September 15–16. According to FedWatch Tool data, there is a 65.2% probability that the rate will be maintained at 3.50%–3.75%, alongside a 34.8% chance of a rate hike to 3.75%–4.00%.
Bitcoin Price Action and Liquidations on FOMC Days
Interest rate decisions and monetary tightening heavily influence risk assets such as Bitcoin. Out of the five decision days in 2026, three—occurring in January, March, and June—marked clear bearish pivots. Meanwhile, July brought indecisive movement, and April saw a bullish uptick following reassurances regarding liquidity conditions during Jerome Powell's final meeting.
Market liquidations surrounding these announcements have generally ranged between $300 million and $500 million. However, the January announcement and subsequent nomination of Kevin Warsh triggered the largest liquidations of 2026, resulting in $2.407 billion in long positions liquidated compared to $154.7 million in short positions, while Bitcoin fell 7% from $84.6k to $78.7k.
Spot ETF Flows and Macroeconomic Pressures
Spot ETF flows around interest rate announcements have largely reflected negative sentiment. Outflows were recorded during several announcement windows:
- January 28–29: -$837.4 million
- March 18–19: -$253.7 million
- April 29–30: -$114.1 million
- June 17–18: -$172.9 million
In contrast, the July 29–30 window recorded net inflows totaling $265.2 million. Broader macroeconomic indicators have also signaled tightening conditions, with the 10-year Treasury note yield reaching 4.7% and the 30-year note yield climbing above 5.2% by July, reaching levels not seen since 2007. Analysts noted that rising long-term rates suggest investors are losing confidence in debt management and inflation control, creating a challenging environment for risk assets like Bitcoin in the absence of a shift in liquidity conditions.
