Bitcoin was trading roughly flat in the hour after the U.S. central bank hewed to its recent policy of keeping interest rates unchanged until it sees convincing evidence that inflation is unlikely to tick up again. The largest cryptocy by market value was changing hands at about $104,250, according to crypto data provider CoinGecko, although it was slightly up over the past 24 hours. BTC is more than 5% off its high, set less than a month ago amid a wider swoon in crypto markets.
Ethereum was also recently flat, while Solana climbed a few fractions of a percentage point in the hour after the Fed decision. With the exception of Ethereum, altcoins have struggled during the past 30 days. Crypto and other risk-on markets had overwhelmingly expected the Federal Reserve’s decision with the widely watched CME FedWatch tool forecasting a more than 99% probability the bank would leave rates at their current 4.25% to 4.50% range.
The bank last trimmed the rate in December, four meetings ago. On Wednesday, it projected just two rate cuts, consistent with its stance at March meeting when it last issued a so-called dot-plot projection. “Uncertainty about the economic outlook has diminished but remains elevated,” the bank said in release, adding: “In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.”
The Fed’s caution comes despite a series of surprisingly encouraging inflation readings. Last week, the Consumer Price Index rose an unexpectedly small 0.1% compared to April, sending the annual rate to 2.4%, not far off the bank’s 2% target. And April’s Personal Consumer Expenditures climbed just 0.1%, buoying investors looking for a rate reduction.
But central bankers have been watchful of the impact caused by U.S. President Donald Trump’s global trade war and other macroeconomic uncertainties that could send prices higher while casting the economy into recession. In remarks following the decision, Federal Reserve Chair Jerome Powell said that the size of the tariff effects and their duration and time it will take are all highly uncertain.”
“We know that the time will come,” Powell said. “It could come quickly, it could not come quickly. As long as the economy is solid, though, as long as we’re seeing the kind of labor market that we have, and reasonably decent growth and inflation moving down, we feel like the right thing to do is to be where we are.” Trump has repeatedly pressured the bank to cut rates and insulted Powell for inaction. On Tuesday he called Powell “stupid,” arguing that the U.S. central bank “probably won’t cut [interest rates] today,” despite “no inflation” from tariffs.
Interest rate cuts would likely bolster crypto markets by introducing additional liquidity. Bitcoin is among the most reactive assets to liquidity. Last week’s eruption of long-simmering antagonisms between Iran and Israel and the increasing likelihood of U.S. involvement have further clouded economic forecasts and dampened hopes for more dovish monetary policy.
Brent crude oil, a widely watched measure of energy market trends, rose 4% on Tuesday to more than $75 per barrel, the first time it’s topped that mark since mid-February, according to Trading Economics data. In an email to Decrypt Wednesday, CoinMarketCap Research Lead Alice Liu said that investors would be looking for Jerome Powell to signal whether the Fed’s monetary policy would remain more hawkish or less restrictive.
“If Powell emphasizes inflation risks or downplays September cuts, Bitcoin could test support at $91,500, with altcoins likely underperforming amid tighter liquidity expectations,” she said. “A dovish surprise (future cuts hinted) means we can expect a relief rally across crypto. Bitcoin could quickly rebound toward $110,000, with high-beta names like Ethereum and Solana potentially seeing amplified gains.” In an email Tuesday, Nigel Green, CEO of financial advisory giant deVere Group, wrote that “the Fed isn’t seeing the kind of clean, convincing disinflation trend it needs to justify an immediate cut. The data is pointing in the right direction—but we’re not there yet.”
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