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08/16 update below. This post was originally published on August 15

BitcoinBTC, ethereum, XRPXRP and other major cryptocurrencies have been stuck in a rut recently, despite a "monster crypto killer-app" potentially priming the market.

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The bitcoin price has almost doubled so far this year, rocketing as China stages a surprise crypto flip, Tesla billionaire Elon Musk pulls in the pin on a crypto grenade and the world's largest asset manager readies a bitcoin, ethereum and XRP bombshell.

Now, after payments giant PayPal surprisingly doubled down on crypto, one closely-watch bitcoin and crypto analyst has warned the Federal Reserve is about to trigger that "greatest rug pull ever" and could cause bitcoin price chaos later this year.

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"What were doing now is the greatest rug pull in liquidity ever after the biggest pump in liquidity ever," Bloomberg Intelligence senior macro strategist Mike McGlone told podcaster Scott Melker. "And the fact that I can say that and show the data is still shocking to me."

McGlone warned that as liquidity continues to decline through the rest of 2023, the bitcoin price could collapse, dragging on ethereum, XRP and the wider crypto market.

08/16 update: Federal Reserve officials on the interest rate-setting Federal Open Market Committee were worried the continued pace of inflation could require more rate hikes during the last meeting, details released today have shown.

"With inflation still well above the Committees longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy," officials said during the July meeting, according to the minutes.

U.S. inflation is still far from the Fed's 2% target, with the July consumer price index (CPI) coming in at 3.2% over the same period last year, though that's down from its June 2022 9% peak.

The Fed began sucking liquidity out of the system in late 2021, when the bitcoin price peaked at almost $70,000 per bitcoin, and hiking interest rates to drive down soaring inflation in the aftermath of economic shocks caused by the Covid pandemic and global lockdowns.

"Lets picture ourselves in December. Recessions kicking in. People are hoping the Fed will ease and theyll probably going to say, 'No were not, because we still see high inflation,'" McGlone said, adding he's looking to bitcoin as an early indicator.

"What should be early indications of [recessionary times]? What was the biggest liquidity pump indicator, new technology ever for the last 10 years? Cryptos. The best indication should be bitcoin and thats where Im looking for the bleeding occasion from bitcoin and its still kind of showing what I expected. It got up to near $30,000 and its just not been able to get much above there."

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Officials are divided ahead of the Fed's next interest rate meeting, set for September, with many economists and central bank watchers predicting the Fed will hold rates steady at the highest level in just over 20 years.

"Inflation is still significantly above" the Feds 2% target, Fed governor Michelle Bowman said last week at an event in Atlanta, it was reported by CNN. "Given these developments, I supported raising the federal funds rate at our July meeting, and I expect that additional increases will likely be needed to lower inflation to the FOMCs goal."

I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported on how technology is changing business, political trends, and the latest culture and lifestyle. I have covered the rise of bitcoin and cryptocurrency since 2012 and have charted its emergence as a niche technology into the greatest threat to the established financial system the world has ever seen and the most important new technology since the internet itself. I have worked and written for CityAM, the Financial Times, and the New Statesman, amongst others. Follow me on Twitter @billybambrough or email me on billyATbillybambrough.com.Disclosure: I occasionally hold some small amount of bitcoin and other cryptocurrencies.

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Greatest Rug Pull EverShocking Fed Warning Heralds Bitcoin, Ethereum, XRP And Crypto Price Chaos - Forbes