Russia-Ukraine War Torpedoes Bitcoin; Experts Say Fed U-Turn on Rate Hikes Unlikely

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Russia-Ukraine War Torpedoes Bitcoin; Experts Say Fed U-Turn on Rate Hikes Unlikely
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Observers foresee a shallow rate Fed rate hike cycle and limited impact on asset prices, including bitcoin. markets FED bitcoin

U.S. Federal Reserve Chairman Jerome Powell.

However, experts do not foresee a complete U-turn by the Fed."It's hard to imagine the Fed completely walking back on its plans for a hike in March," said Matthew Dibb, COO and co-founder of Stack Funds."There is no doubt that inflationary pressures will also arise from a surge in commodity prices. Russia and Ukraine remain some of the largest exporters of various precious metals and agriculture.

Kruger, however, added that crude and food grains do not represent core inflation and the Fed may ignore a spike in their prices. It remains to be seen if the central bank turns a blind eye toward the volatile components of inflation in the coming months."Its impossible to gauge the Fed's response now and we will get a feel once the officials start talking about it," Kruger said.

As of Wednesday, the markets were priced for a six quarter percentage point interest rate hikes for 2022. However, with Putin announcing war on Ukraine, rates traders appear to be pricing out the sixth rate hike, according to the Fed funds futures data. Further, the market is already pricing a rate cut in 2024.

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