At the time of writing, the top cryptocurrency is trading at $79,190. Unless major positive news comes out of China in the coming hours, this decline could gain momentum. Meanwhile, a new bill concerning the Federal Reserve’s dual mandate has sent shockwaves through financial circles.
Rate hike expectations return
The likelihood of a U.S. recession has once again reached the 50% threshold. As a result, rate hikes are now seen as the most probable scenario for the remainder of 2026. While economists’ recession expectations rise, artificial intelligence remains the only sector growing rapidly enough to potentially offset this negative outlook.
Today’s Producer Price Index (PPI) data was the last straw. With inflation at 5-6%, levels previously seen in 2022–2023, the chances of the Fed restarting rate hikes are increasing. The labor market remains strong, offering the Fed no immediate incentive to initiate rate cuts.
Congress targets Fed mandate
Amid these developments, Nick Timiraos of The Wall Street Journal reported that the House Financial Services Committee is working on a new legislative amendment. If passed, this bill would revise the Federal Reserve Act, reducing the Fed’s dual mandate to a single focus: price stability. Employment data would take a back seat to inflation, and a sharp move toward a 4% interest rate could follow if inflation persists.
Though Donald Trump is expected to oppose this, preparations for such a bill coincide with the expectation that Trump could lose the November election. The prospect of a Democratic majority in Congress suggests that, even if Warsh becomes Fed Chair, tight monetary policy would be maintained until Trump leaves office.
This potential shift in U.S. monetary policy has direct implications for global markets—especially cryptocurrencies. As the Fed appears poised to double down on fighting inflation, risk assets like Bitcoin face renewed headwinds.
Investors are closely watching developments both in Washington and Beijing. Any unexpected announcement from China could alter sentiment quickly, but without such a catalyst, market pressure is likely to remain.
The prospect of abandoning the Fed’s dual mandate is rare in modern American history. Many experts argue this would fundamentally reshape the central bank’s approach, impacting everything from treasury yields to crypto asset prices.
For now, all eyes are on the Federal Reserve, Congress, and upcoming U.S. elections. The intersection of politics and monetary policy continues to be a major driver in the performance of digital currencies such as BTC.
As developments unfold, volatility may rise in $BTC and across the broader crypto market, especially if global macroeconomic conditions worsen or legislative changes proceed.
