Crypto Chaos: How the US and New Zealand Are Navigating Uncharted Waters in Digital Assets

The regulatory rollercoaster continues as the US and New Zealand grapple with crypto's wild west—neither ready to fully embrace or ban it. Here's why that's creating both opportunity and chaos.

Regulatory Whiplash Hits Markets

Politicians flip-flop faster than a DeFi exploit, leaving traders scrambling. The SEC’s latest ‘guidance’ smells more like a stalling tactic than actual policy—classic bureaucratic theater.

New Zealand’s Sandbox Approach

Meanwhile, Wellington tiptoes toward innovation with ‘test-and-see’ frameworks. Too cautious? Maybe. But at least they’re not pretending NFTs are securities like their American counterparts.

The Institutional Waiting Game

Hedge funds hover at the sidelines with billions, waiting for clarity that never comes. Spoiler: They’ll probably FOMO in at the next ATH after retail’s already been liquidated.

This isn’t uncertainty—it’s the sound of traditional finance slowly realizing they’re becoming the Kodak of money.

The United States (US) Federal Reserve and the Reserve Bank of New Zealand (RBNZ) have been struggling to manage economic uncertainty, geopolitical instability and investor pressure as they reach the end of their rate-cutting phases.

Both central banks want to restructure their monetary policies in markets facing inconsistencies, threats of inflation, disruptions to global trade and unpredictable political changes.

This uncertainty in global macroeconomics has impacted the cryptocurrency market. Bitcoin has been hovering around $105,000, and investor conviction is waning.

Traders are in a precarious position, struggling to interpret the haggling over rate cuts as a sign of economic resilience or a warning that things could soon go south.

US – The Unclear Roadmap

The US Federal Reserve held the storm this month but also acknowledged two 25 basis point cuts could come before the end of the year.

However, they reminded everyone not to jump the gun because nothing is set in stone and that data will drive any forthcoming decisions.

Gross domestic growth expectations have dropped, and forecasts are also down to 1.6 percent from 1.8%, leaving policymakers in a difficult situation.

Some federal officials believe cuts are necessary, especially if tariff pressures start climbing recklessly again, but others are not budging. Seven of the 19 voting casting members do not want to see any cuts in 2025.

To make matters worse, there is political noise around the situation. President TRUMP recently criticised the Federal Reserve and has been pushing for less strict monetary conditions. The two-time American president also clashed with Powell in his first tenure in the White House.

The central bank is not under the control of the presidency, but market analysts understand that politics changes things, especially around election time.

Crypto traders do not appreciate this uncertainty. The sentiment around risk is fragile, and they can only hope for rate cuts, of which there is no guarantee.

New Zealand – Rate Cuts Amid Caution

The RBNZ has been more proactive than its US counterpart, taking serious steps. They cut the benchmark interest rate by 25 basis points to 3.25%.

They pointed to the vulnerable export-focused economy, which relies heavily on demand from China. Following that move, total cuts in this easing cycle are up to 225 basis points.

They have been surprisingly aggressive compared to their peers. Ahead of a crucial July 9 meeting, many people believe they will pause. However, the option of another 25 basis points cut is still on the table.

Some officials are worried about external trade shocks because it has been hard to plot China’s growth trajectory, and tariffs from the US are making things unpredictable for New Zealand.

Despite moving quickly to make cuts, not every faction is confident. The institution admitted uncertainty shrouds the outlook and that global changes can have a trickle-down effect.

Inflation numbers have dropped, but they remain an issue in food and housing, which are very sensitive areas of the New Zealand economy.

Investors and stakeholders, including the lucrative iGaming industry, are keeping their eyes peeled for new developments.

Some of the most reputable online casinos in NZ provide users with the option of using cryptocurrency. Operators and players will be watching for any changes that could affect the digital asset economy.

Traders in New Zealand are already dealing with a smaller and more volatile market, and this added uncertainty from currency swings and liquidity issues does not make things any easier.

If New Zealand were weaker and interest rates lower, it might have encouraged capital into Bitcoin as a store of value, but only if inflation stays down.

The macroeconomic picture could deter traders from taking speculative bets.

Crypto at a Crossroads

Macroeconomics cannot be separated from the crypto market.

Unfortunately for the US and New Zealand, their monetary institutions are slowly sapping conviction from investors who thought digital assets were a haven from these sorts of macroeconomic issues.

Bitcoin and other cryptocurrencies are now tied to rate expectations, inflation forecasts and geopolitical risks. For all the talk about crypto and decentralisation, digital assets remain tethered to well-known monetary levers.

Even positive news around crypto will struggle to sink in as this illusory fourth wall breaks. Without movement from the US Federal Reserve or the RBNZ, crypto may struggle to sustain momentum.