- Bitcoin and XRP recovered on Friday after a broader market selloff triggered by hotter-than-expected US inflation data.
- Fed Chair Kevin Warsh declined to say whether the FOMC would raise rates at its October 27–28 meeting.
- Traders sharply reduced their odds of a near-term hike, though worries about a December increase persist.
Bitcoin and XRP climbed back and held their gains on Friday, even as Federal Reserve Chair Kevin Warsh withheld any signal on whether the Federal Open Market Committee will raise rates again this month. The rebound followed a sharp drop in stock and crypto markets that had been driven by US consumer and producer price data running hotter than expected. Crypto traders are now watching closely for the Fed’s next move and for how energy prices and geopolitical tensions shape it.
What Happened
Warsh spoke during a discussion with IMF Managing Director Kristalina Georgieva at the IMF-World Bank Annual Meetings. He reiterated the central bank’s commitment to price stability. The Fed had raised rates in September for the first time this year, lifting the target range to 3.75%–4%, in response to persistent inflation, elevated oil prices, and strong investment demand.
When pressed about the October 27–28 FOMC meeting, Warsh did not offer a preview. “I don’t prejudge meetings. I don’t believe in saying now what I might do at the meetings we have in the balance of this year,” he said. The remark reflects his continued preference for data-dependent decision-making rather than forward guidance.
Warsh also observed that most central banks have tightened policy to fight inflation, which he described as a shared effort in which no country can benefit without contributing. He pointed to resilience in the US and other economies despite geopolitical conflict and high energy costs. US retail sales had come in above expectations for two consecutive months, a data point he cited as evidence of underlying strength.
He defended the September rate increase as necessary. Warsh also called artificial intelligence “probably the most consequential change to the US and the global economy in my lifetime,” and cautioned that the path ahead would be “very bumpy.” AI-related investment is currently supporting demand, and he noted that the US is benefiting from a wider investment surge beyond AI.
Market reaction was measured. Asian equities and US stock futures edged higher on Friday, and crypto prices followed. The CME FedWatch Tool showed the probability of a 25-basis-point hike has fallen from 33% to 15% within a few hours, reflecting expectations of a pause in October. Concerns about a possible December hike, however, have not disappeared.
Why It Matters
For investors, the session highlighted how sensitive risk assets remain to inflation data and central bank language. Warsh’s refusal to preview the October meeting left markets without the clarity many had hoped for, which is why the sharp move in rate-hike odds stood out. Traders are effectively pricing a pause while still hedging against further tightening later in the year.
For the crypto market, the key point is that Bitcoin and XRP recovered even though the macro backdrop remained uncertain. Higher interest rates generally weigh on speculative assets because they raise the return investors can earn from safer holdings. Any shift in expectations about the Fed’s path therefore tends to move digital asset prices quickly, in either direction.
Market Context
Several macro indicators shaped Friday’s trading. The 10-year Treasury yield was largely stable near 5.08% after Warsh’s remarks. The US dollar index (DXY) fell to 101.83. Oil prices dropped to almost $97 per barrel after the International Energy Agency said it plans to speed up the release of its remaining emergency oil stocks, along with Russian diesel supply. At the same time, reports that Iran had struck tankers in the Strait of Hormuz added to geopolitical uncertainty.
Bitcoin rose more than 2% over the previous 24 hours and traded near $82,300. It rebounded from a low of $79,805 to a 24-hour high of $82,508 as buyers stepped in on the dip, and it has held above its 50-day moving average. XRP climbed to around $1.35 after falling to $1.28 over the same period. CoinGape reported that a popular analyst had anticipated a decline toward $1.25 before buying pressure could push the token back toward $1.42 and then $1.60.
These price moves should be read within the broader context. Crypto markets have been reacting to inflation data, central bank commentary, and energy-related headlines rather than to crypto-specific developments alone.
What to Watch Next
Readers should keep an eye on several developments in the coming weeks:
- Inflation releases: Further CPI and PPI reports will shape expectations for the October and December FOMC meetings.
- FOMC decisions: The October 27–28 meeting will be the next key test of whether the Fed holds rates steady.
- Treasury yields and the dollar: Movements in the 10-year yield and the DXY can influence risk appetite across markets, including crypto.
- Energy markets: Oil prices and developments in the Strait of Hormuz remain a source of volatility and inflation risk.
- Technical levels: Bitcoin’s ability to hold above its 50-day moving average and XRP’s movement around $1.28 and $1.42 will be closely monitored by traders.
Source: original report
