Traders are cutting risk ahead of the Fed’s April decision as Middle East tensions, a blocked Strait of Hormuz and fragile crypto sentiment keep markets on edge.
Summary
- Pepperstone’s Michael Brown says traders are cutting risk before the Federal Reserve’s April decision.
- Geopolitical tensions and a blocked Strait of Hormuz add to caution across global markets.
- Derivatives data show markets largely positioned for the Fed to hold rates steady into year-end.
Traders are trimming exposure to risk assets ahead of the Federal Reserve’s latest interest rate decision, with Pepperstone analyst Michael Brown warning that many participants “will want to cut back on their positions” before the announcement at 2 a.m. Beijing time on April 30.
Fed decision looms as traders de‑risk
According to a recent Pepperstone FOMC preview, money markets are pricing virtually no chance of a policy move, with the federal funds rate expected to stay in a 3.50%–3.75% range and only around 12 basis points of easing priced by year‑end, implying roughly an even probability of just one 25‑basis‑point cut in 2026.
In crypto markets, earlier this month traders have already been fading aggressive Fed‑cut bets for 2026 as U.S. unemployment fell to 4.3%, tempering the liquidity story for assets like Bitcoin and Ethereum.
Middle East conflict and Hormuz blockage fuel risk aversion
Brown underscored that the backdrop is not just about the Fed, flagging that “there is still no good news regarding the Middle East conflict” and that the Strait of Hormuz “remains blocked,” a combination that keeps traders wary of fresh shocks to oil and broader risk sentiment.
Pepperstone recently noted that “the Strait of Hormuz remains impassable” and that much of the market’s recent relief has been built more on “hope” than on “expectation,” even as Brent and WTI crude briefly dipped back below $100 per barrel.
Those tensions have already rippled into digital assets, with the crypto fear and greed index dropping from 12 to 10 in February as Iran’s naval drills and brief closures of the strait raised energy‑cost risks for Bitcoin miners and other energy‑intensive players, according to a crypto.news report.
Earlier in April, the crypto market added roughly 4.3% to push total capitalization above $2.6 trillion after signs that Iran might soften its stance in talks over the war and shipping restrictions, while Bitcoin rallied toward $74,800 on the day and around $430 million in short positions were liquidated, data cited by another crypto.news story showed.
Those gains remain fragile as ceasefire negotiations stall and Iran turns the Strait of Hormuz into a $1‑per‑barrel bitcoin tollbooth during limited truces, a move that keeps energy and macro uncertainty elevated for traders across equities, bonds and crypto.
In a previous crypto.news story, rising oil above $100 per barrel and threats to Iranian energy infrastructure were already pressuring risk assets by reviving fears that the Fed would have to stay restrictive for longer, a dynamic that now frames Brown’s warning that position‑cutting into this week’s decision may be the path of least resistance for cautious traders.
