Bitcoin May Gain from Fed’s Stagflation Risk Signal, According to Analyst

Fed Signals Growing Concern Over Stagflation, Analysts Predict Bitcoin Could Benefit

The Federal Reserve is becoming increasingly wary of the risks posed by stagflation, a potentially damaging combination of rising inflation and sluggish economic growth that could limit policymakers’ options.

Despite Federal Reserve Chair Jerome Powell’s reassurances that the U.S. economy is in “good shape” and that the Fed is in a favorable position to remain patient before adjusting its monetary policy, subtle changes in the Fed’s recent statement suggest heightened concerns over economic conditions.

In its latest policy decision, the central bank held its benchmark interest rate steady and acknowledged the growing risk of both inflation and rising unemployment—factors that point to stagflation, an economic dilemma last seen in the 1970s. Such a scenario would restrict the Fed’s ability to support economic growth without further exacerbating inflation.

“There’s a clear concern about stagflation at the Fed,” noted Zach Pandl, head of research at Grayscale, after the Fed’s announcement. “This scenario could ultimately be positive for bitcoin.”

Pandl explained that rising tariffs, which contribute to stagflation, have historically been detrimental to traditional financial assets, but they tend to benefit scarce assets like gold. “Bitcoin is increasingly being recognized as a modern store of value,” he added. “Though it wasn’t around during previous stagflationary periods, bitcoin can now be viewed as a scarce digital commodity.”

In the wake of the Fed’s decision, Bitcoin remained within a tight trading range, briefly reaching $97,500 before settling back to $96,500, reflecting a 1.6% increase over the past 24 hours.

In contrast, the broader cryptocurrency market, as measured by the CoinDesk 20 Index (CD20), gained a modest 0.3%. However, major altcoins such as XRP, AVAX, UNI, NEAR, and AAVE experienced declines between 1% and 3%.

Equities showed some recovery, with the S&P 500 and Nasdaq both posting modest gains of 0.4% and 0.3%, respectively.