Fed Raises Stagflation Concerns, Analyst Predicts Bitcoin Could Benefit
The Federal Reserve is increasingly concerned about the potential for stagflation—a mix of slow economic growth and rising inflation—which could pose a significant challenge for policymakers in the coming months.
Despite Chair Jerome Powell’s assertion that the economy is currently “in good shape” and the Fed is “in a good position to wait and see” before making any policy changes, subtle shifts in the Fed’s statement signaled growing unease about the economic outlook.
In its latest announcement, the U.S. central bank decided to keep its key interest rate unchanged, yet acknowledged the rising risks of both inflation and unemployment—an early warning sign of stagflation. This scenario, which plagued the economy during much of the 1970s, would leave the Fed with limited options to stimulate growth without exacerbating inflation.
“Stagflation is clearly on the Fed’s radar,” said Zach Pandl, head of research at Grayscale, on social media after the Fed’s decision. “We believe this scenario could be bullish for bitcoin.”
Pandl has previously argued that rising tariffs contribute to stagflation, which tends to hurt traditional assets. In contrast, scarce stores of value, like gold, typically perform well under such conditions. With bitcoin now regarded by many as a modern store of value, Pandl suggests it could similarly benefit in the face of rising inflation and economic stagnation.
Following the Fed’s announcement, bitcoin fluctuated within a narrow range. It briefly spiked to $97,500 on renewed optimism about U.S.-China trade talks before settling at $96,500—up 1.6% over the last 24 hours.
Meanwhile, the broader crypto market, as tracked by the CoinDesk 20 Index (CD20), saw modest growth, rising just 0.3%. However, several major altcoins such as XRP, AVAX, UNI, NEAR, and AAVE saw declines between 1% and 3%.
In contrast, U.S. equities posted slight gains, with the S&P 500 and Nasdaq both closing up 0.4% and 0.3%, respectively.
