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Cryptos have jumped this year, with Bitcoin leading the way.
While the broad outlook for cryptos is positive, the real risk is the Federal Reserve's rate path.
"Despite what was clearly a meeting with considerable differences of opinion, and very low conviction on the way forward, the key element to the June FOMC minutes seems to be that 'almost all' officials thought more tightening would be needed this year," said Robert Carnell, regional head of research for Asia-Pacific at ING.
The cat-and-mouse game between market bets on US interest rates and the Fed's view and projections have left cryptos in limbo at several points this year.
Ashrith Rao
According to CME Group's FedWatch tool, investors are pricing in an 88.7% likelihood that the Fed will raise rates by a quarter percentage point in July after halting last month, but just a 17.7% chance for another boost in September.
There has been a tectonic shift in expectations for what the Fed would do.
While the US central bank was forecast to cut rates at some point in the second half of this year, the latest projections are debating whether the Fed would hike once or more than once from here.
"The Fed is winning its hawkish rhetoric and turning markets to shun their rate cut bets for this year," said a chief investment officer at a large asset management firm in Boston.
"What does this mean to the digital assets industry already dealing with increased scrutiny – more chaos and less clarity," added the CIO.
What has not helped is the mixed economic data readings, which show the US economy is still resilient and bets of when a recession will hit have see-sawed.
To add to the mix of uncertainty is the US-China trade spat.
The tit-for-tat trade policies between the US and China also hurt investor sentiment, especially for risky assets like cryptos.
Ashrith Rao
While the recent filings for Bitcoin ETF by large asset managers, including the world's largest – Blackrock, have helped the digital assets market, there is still a lot of uncertainty.
Investors are currently focused on what the Fed does next, as it is clear from the latest minutes the members themselves need to be sure of what needs to be done.
"One more and done or more in store is the more important question in the Fed's mind, and that sentiment is playing out in digital assets markets at the moment," said a digital assets investment advisor at a large investment research firm in New York.
"Markets push to force the Fed's hands have gone awry so far, and until the Fed is clear on its next steps, investors will play catchup," added the advisor.
