Coinbase Shares Drop as FOMC Cuts GDP Growth Forecast to 1.7%

Coinbase shares experienced a decline as the broader stock market faced a downturn, reflecting the broader economic uncertainty and the impact of macroeconomic factors on the cryptocurrency sector. The recent Federal Open Market Committee (FOMC) meeting resulted in significant revisions to economic projections, indicating a more challenging economic environment. The Federal Reserve cut its GDP growth forecast from 2.1% to 1.7% while raising its unemployment projection to 4.4%. Inflation expectations also increased, with PCE inflation forecasted at 2.7% and core PCE inflation at 2.8%. These revisions suggest a more challenging economic environment, with the US Dollar Index (DXY) dropping in the aftermath.

The decline in the DXY triggered discussions about its implications for Bitcoin (BTC) and broader liquidity conditions. Market analysts and crypto experts suggest that the declining dollar could create a more favorable environment for Bitcoin’s price recovery. This optimism comes despite lingering macroeconomic concerns. However, the FOMC rejected further interest rate cuts, and the Fed made significant downward revisions to its 2025 economic projections. This painted a picture of weaker growth and persistent inflation.

The recent downturn in BTC prices could be a delayed reaction to the strong dollar in late 2024. Bitcoin has historically tracked an inverted DXY on a 10-week lag. If the pattern holds, the recent weakness in DXY could set the stage for a bullish phase in Bitcoin over the coming months. However, macroeconomic risks—including rising corporate bond spreads and potential instability in traditional markets—could still create headwinds.

The post-FOMC environment presents a mixed outlook for Bitcoin. On the one hand, falling DXY, lower Treasury yield volatility, and slowing quantitative tightening (QT) point to increasing liquidity, a historically positive signal for BTC. On the other hand, macroeconomic risks—including rising corporate bond spreads and potential instability in traditional markets—could still create headwinds. With Bitcoin’s historical lag behind DXY movements, the coming weeks will reveal if a delayed rally materializes. Meanwhile, global liquidity conditions and political developments remain key factors that could influence Bitcoin’s next major move.