The Federal Reserve is now projected to raise interest rates twice in 2026, reversing the policy trajectory anticipated by markets earlier this year. Data from the CME FedWatch Tool shows that the probability of a 0.25% rate hike at the July meeting jumped to 40%. According to a report from WatcherGuru, which has 4.5 million followers on X, this July probability surged from just 12% a week earlier.
This shift in expectations is directly driven by worsening global inflation indicators. Geopolitical conflict between Iran and the United States sparked an oil price surge to $100 per barrel, adding a fresh layer of pressure on production and logistics costs. Citing market newsletter The Kobeissi Letter, inflation and interest rate expectations are rising sharply once again. The ripple effect was immediately felt in the bond market, with the 10-year US Treasury yield hitting an 18-month high.
Testing the Resilience of Stocks and Crypto
Historically, high interest rate trends have always acted as a headwind for high-risk assets. Tech stocks and the crypto market have been among the first sectors to feel the pressure. During the July 23 trading session, the S&P 500 fell 1.2%, while the tech-heavy Nasdaq dropped 2.2%.
In the digital asset market, the dual headwinds of geopolitical conflict and tight central bank policy are hampering price recovery efforts. Bitcoin is currently trading roughly 53% below its all-time high of $120,000 recorded in October 2025. An analysis report from Binance Research concluded that this series of macroeconomic pressures could continue to limit Bitcoin’s recovery room at least until the third quarter of 2026. This sentiment signals that the market downturn may last longer than expected.
The Collapse of the Safe-Haven Illusion
This macroeconomic turbulence has hit various asset classes indiscriminately, including instruments long considered stable. Veteran investor Anthony Pompliano, who has 2.2 million followers on X, highlighted the irony in the debt market. He noted that investors who allocated capital to bonds five years ago assuming they were safe assets are now sitting on 50% losses. The hedging narrative is being tested across the entire market.
The test for the crypto market this year has shifted from mere local regulations to global liquidity conditions. For market participants waiting for the next bullish momentum, inflation movements and the Fed’s July interest rate decision will determine where institutional capital flows.
Reported by @WatcherGuru on X.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
