U.S. macroeconomic uncertainty has driven Bitcoin to a two-month low, but cooling inflation suggests that monetary policy may soon bolster the risk appetite.

Bitcoin’s (BTC) dip under $57,000 followed minutes from the U.S. Federal Reserve meeting, which confirmed a continuation of current interest rates until economic data justifies looser policies.

“The Fed’s decision to maintain a wait-and-see approach before committing to interest rate cuts signals a cautious optimism that inflation is on a downward trajectory but not sufficiently assured to justify immediate rate reductions,” said Head of Derivatives at Bitfinex, Jag Kooner.

The leading cryptocurrency displayed the macro correlation mentioned by Token Bay Capital founder Lucy Gazmararian last month, as BTC shed over 5% in 24 hours. Higher interest rates, like the levels maintained by the Fed, usually counteract demand for risk assets like cryptocurrencies, which likely catalyzed Thursday’s market activity.

With the central bank targeting 2% inflation, BTC has traded between $56,800 and $70,000 after a strong start to the year. Momentum from spot BTC ETF approval and pre-halving hype has cooled, but Kooner predicted that upcoming data may shape a clearer outlook for the coming months.

According to Kooner, the Non-Farm Payrolls (NFP) report expected on Friday could increase expectations for future rate cuts or spell further downward pressure for Bitcoin.

If market participants believe the ongoing economic uncertainty will eventually encourage the Fed to cut rates, Kooner said Bitcoin’s appeal as an inflation hedge could rise again, directing capital into spot BTC ETFs.

However, “we’ve recently seen quite underwhelming flows and a lack of ‘dip-buying’ since the Bitcoin halving,” Kooner remarked. Bloomberg’s James Seyffart noted that U.S. spot BTC ETF activity has stalled, especially regarding trading volume.

“US Bitcoin ETF flows have mostly stagnated. Not seeing tons of inflows, not seeing tons of outflows. Net inflows since launch sit at a very healthy $14.7 billion, but the trading volume for the group is definitely on a downtrend. The group hasn’t hit $3 billion since mid-May,” said Seyffart.

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