LMAX Digital volumes came in on the lighter side on Wednesday. Total notional volume printed $225 million, 12% below 30-day average volume.

Bitcoin volume printed $104 million, 21% below 30-day average volume. Ether volume came in at $47 million, 2% below 30-day average volume.

Looking at average position size over the past 30 days, we’re seeing average bitcoin position size at $6,314 and average position size for ether at $1,032.

Volatility is showing signs of wanting to turn up of multi-month lows. We’re looking at average daily ranges in bitcoin and ether of $2,201 and $84 respectively.

Crypto is trading on the back foot after the Fed delivered a clear signal that the reaction function under Chair Warsh is shifting in a more hawkish direction.

Markets are now digesting the prospect of higher rates, stronger dollar demand, and less support from the central bank safety net.

The immediate concern is straightforward.

A Fed that is more focused on inflation and less willing to guide markets toward future accommodation raises the risk of tighter financial conditions, higher volatility, and more pressure on risk assets.

Against this backdrop, it is not surprising to see crypto come under pressure in the immediate aftermath of the decision, as markets reassess the implications of a stronger dollar, higher yields, and a Fed that appears less concerned with supporting risk assets.

At the same time, we would be careful not to overstate how radical this shift will ultimately prove to be.

The Fed may be trying to repackage its communication framework and reassert its inflation-fighting credentials, but that does not necessarily mean policy will become dramatically more restrictive.

If energy-led inflation fades as geopolitical tensions ease, the Fed could still find itself with enough cover to step back from the hawkish edge, especially with parts of the economy already showing less need for restrictive policy.

This leaves crypto in a more favorable position than the initial market reaction might suggest.

The hawkish bar has now been raised, which means any softer data, calmer inflation trend, or less aggressive Fed follow-through could quickly swing sentiment back in favor of equities, currencies outside the dollar, and digital assets.

In that sense, the market may have moved from fearing cuts would not come to now fearing hikes will, creating room for disappointment in the hawkish narrative.

More importantly, bitcoin’s longer-term investment case does not depend on the Fed.

Adoption continues, more financial activity is moving on-chain, and bitcoin’s store-of-value characteristics should become more relevant over time, even during periods of broader market stress.

ETH and the rest of crypto also have a separate structural story, built around stablecoins, DeFi, tokenized assets, and alternative yield opportunities that point to the formation of a new financial architecture.

The bottom line is that the Warsh Fed has created a tougher near-term backdrop, but not necessarily a broken one for crypto.

Bitcoin and ETH have already endured a deep repricing, sentiment remains depressed, and the market looks increasingly consistent with late-cycle accumulation rather than the start of a fresh liquidation phase.

If crypto can stabilize despite a stronger dollar and less friendly Fed communication, it would strengthen the case that the asset class is beginning to stand on its own feet.

And based on the continued pace of adoption, expanding on-chain activity, and growing institutional engagement, we believe it can.