Bitcoin Besieged by Hawkish Fed, Strategy Funding Squeeze as Market Eyes Reserve Bill

Fed Douses Rate-Cut Hopes

Strategy Hit by Funding Squeeze

Legislative Delays Chill Institutional Appetite

Bitcoin Reserve Bill Seen as Last Hope

Bitcoin is under pressure on multiple fronts. The Federal Reserve’s more hawkish-than-expected stance has crushed hopes for rate cuts, and a key funding channel for Strategy, one of the market’s biggest Bitcoin buyers, has also dried up, intensifying downside pressure.

On June 18, Bitcoin fell as low as $62,272 intraday, putting the $60,000 level at risk again for the first time in about two weeks. It had held around $65,000 to $66,000 before the Fed’s June 17 rate decision, then slid about 4% after the central bank left rates unchanged and kept the door open to a possible increase. Bitcoin is now down about 50% from its record high reached in October last year.

Bitcoin Stumbles After Hawkish Fed Shock

The sharp change in the macro backdrop is weighing most heavily on market sentiment. Expectations for Fed rate cuts, long seen as a key support for risk assets, were effectively dismantled after the June Federal Open Market Committee meeting, the first under new Chair Kevin Warsh. The Fed held its benchmark rate at 3.50% to 3.75% and removed the phrase “easing bias” from its statement.

Markets were jolted not just by the hold, but by the renewed possibility of a rate hike. Half of FOMC members projected at least one increase this year, underscoring the hawkish shift. Warsh also signaled a quieter approach from the Fed, expressing skepticism toward forward guidance and the dot plot, two tools investors have long used for policy clues.

Global investment banks quickly revised their forecasts. Citigroup pushed back its expected rate-cut path by one month, shifting its calls from September, October and December to October, December and January next year. Nomura and Bank of America maintained forecasts for unchanged rates this year, but concluded that the odds of a hike before year-end had risen after the Fed meeting. CME FedWatch data showed the probability of a September rate increase surging to 51% from 27% in a day. That has dealt a heavy blow to Bitcoin, which had been counting on a liquidity-driven rally from lower rates.

Pressure is also building around Strategy, the largest corporate holder of Bitcoin. The company had been buying more of the token by selling its floating-rate perpetual preferred stock, STRC, through an at-the-market program with a dividend yield of about 12.9%.

That funding route was shut off after STRC fell far below its $100 par value and dropped to $82.50 intraday on June 18, triggering a full halt to the ATM program. One of the company’s key sources of capital for Bitcoin purchases has effectively been blocked.

Investors are also increasingly concerned that Strategy could sell some of its Bitcoin holdings to fund dividends as early repayments of convertible bonds increase its cash burden. The company had already stirred concerns by selling 32 Bitcoin earlier.

Clarity Act Talks Drag On as Institutions Pull Back

Passage of the crypto market structure legislation known as the Clarity Act, long viewed as a potential breakthrough for digital-asset markets, is also being pushed back.

The White House remains optimistic the bill can pass in July. Market specialists are much less sanguine. Eleanor Terrett, a Crypto America reporter, wrote that for the measure to become law by July 4, lawmakers would need to resolve both an ethics compromise acceptable to both parties and disputes involving the Agriculture Committee, then secure at least 60 votes in the Senate. Completing that process within two weeks is physically impossible, she wrote.

Negotiations over ethics provisions have emerged as a new obstacle, with Democrats demanding stronger conflict-of-interest safeguards. That has fueled a view that a first-half deal is effectively out of reach. If talks slip beyond July, Congress’s August recess would likely push passage of the Clarity Act into the second half of the year.

Institutional money is also continuing to leave the market. Data from digital-asset platform SoSoValue show cumulative net outflows of $4.36652 billion from U.S. spot Bitcoin ETFs from October last year through June this year.

The funds posted monthly net outflows in six of the nine months during that period. Outflows reached $3.48 billion in November last year, $1.09 billion in December, $1.61 billion in January this year and $206 million in February. That was followed by another $2.43 billion in May and $2.26 billion in June. Monthly net inflows were recorded only three times over the nine-month stretch: October 2025, and March and April 2026.

ARMA Emerges as Final Backstop

The biggest variable for Bitcoin may now be whether the U.S. strategic Bitcoin reserve bill known as the America Reserve Modernization Act, or ARMA, is passed. The legislation would create a strategic Bitcoin reserve and a digital-asset stockpile under the U.S. Treasury, consolidating management of Bitcoin and other digital assets held by the federal government.

Ahn Kwang-ho, a researcher at Tiger Research, said the bill’s core is no longer the prospect of new U.S. purchases but a 20-year ban on sales. Expectations for fresh buying by the U.S. government have faded, but if the legislation passes, it would send a strong signal that the U.S. will not sell its holdings and could help spark a rebound in prices.

He added that liquidity and regulation are the two issues investors should watch most closely for any Bitcoin recovery. With inflation risks rising again because of the Iran war and reducing the chances of Fed rate cuts, the next U.S. consumer price index and employment data could mark a key turning point for the market.