5 Fed Rate Hike Myths That Are Crushing Bitcoin's Future

Let's be blunt: Bitcoin's recent tumble below $95,000 isn't just some random blip. It's a harsh wake-up call. The story that Bitcoin is a Wild West, free-roaming asset completely separate from the traditional financial markets is dangerously misleading. The truth is, the Fed’s actions do still very much matter — and pretending otherwise is going to lead you down a path towards a world of hurt. Here are five myths that deserve to be buried six feet under, immediately.

Bitcoin is an Inflation Hedge? Think Again.

The notion that Bitcoin is a mystical inflation armor? Utter nonsense. Look at the data. Bitcoin behaves like a high-beta risk asset. When the Fed signals that they will tighten, liquidity goes out the door, and investors start selling risky assets like crazy. Bitcoin is being used as a political football. Give me the empirical evidence that demonstrates Bitcoin’s inverse correlation to inflation on a repeated basis and I will reconsider. Until then, it’s just a narrative that they are feeding themselves in order to justify continuing to hold an incredibly risky asset. It's more like a speculative asset.

The Fed Pivot is Coming Soon? Don't Bet On It.

Everyone’s waiting and praying for a Fed pivot, a return to the monetary promiscuity that will unleash the Bitcoin rocketship. Wishful thinking. Jerome Powell is not going to buckle, especially not when we have inflation still high and a labor market that remains in almost full employment. Remember, the Fed's mandate is price stability. Rate cuts may only come in the event of a major economic shock to the economy. And even then, it’s not clear Bitcoin would gain as much as you expect. The second hidden assumption is that monetary policy has short, predictable real lag effects. It will take months for these rate hikes to work their way through the economy.

Bitcoin Fundamentals Are Invincible? Delusional.

Strong adoption? Groundbreaking technology? Sure, Bitcoin has those things. Fundamentals don't exist in a vacuum. Bitcoin doesn’t exist in a vacuum, though. It exists in the context of a global financial system that is deeply affected by central bank policy. Think of high-flying tech stocks. All of them have amazing fundamentals, but like so many others, they’ve gotten crushed by the looming threat of skyrocketing interest rates. Why should Bitcoin be any different? It’s just a question of when macro factors will start to take a toll.

Trump's Pressure Will Save Bitcoin? Seriously?

Trump is indeed pressuring the Fed. He wants bigly lower rates to juice the economy. The Fed is not supposed to be political; it is supposed to be independent. Even if Trump gets his way (and that's a big if), relying on political pressure to prop up your investment strategy is a fool's game. Whatever else is happening, Trump’s trade policies — and especially these idiotic tariffs he loves to threaten — are generating even more economic uncertainty. A 100% tariff on foreign films? That’s not building bridges; it’s fanning flames of ERISA retaliation and trade war. Guess what happens when uncertainty rises? People sell risky assets, including Bitcoin.

Bitcoin's Dip is a Buying Opportunity? Maybe, Maybe Not.

"Buy the dip!" everyone screams. Okay, but be realistic. This the bottom, or just the bottom before going much further down. If the Fed continues to be hawkish, there’s still much more downside potential. A better approach? Dollar-cost averaging. Accumulate gradually over time. Avoid betting the farm on the expectation that the Fed will miraculously pivot any day now.

Here's the truth: Bitcoin's future isn't solely determined by its technology or adoption rate. It is inextricably linked to the broader macroeconomic environment. To ignore the Fed’s hand is to sail a ship on shifty seas without regard to the storms overhead. Sure you can roll those dice and sometimes, just sometimes, you’ll strike lucky, but you’re much more likely to be found shipwrecked. Get with it, change your approach, and put an end to your holding on to these perverse fables. It's time to face reality.

Here's a quick recap of the myths: