The U.S. Federal Reserve has opted to keep its benchmark interest rates unchanged at 4.25%–4.5%, a move widely anticipated by both traditional and crypto markets. This decision comes amid heightened political scrutiny, with former President Donald Trump publicly criticizing Fed Chair Jerome Powell for not cutting rates, contrasting the U.S. stance with Europe’s recent series of rate reductions.
Despite the political noise and market speculation, Bitcoin’s price remained stable, trading around $104,200 following the announcement. This resilience highlights the current market consensus: most traders had already priced in the Fed’s decision, with over 98% of Polymarket participants betting on no change ahead of the meeting.
Key Takeaways from the Fed’s Update
• Inflation Outlook: The Fed raised its inflation forecast to 3%, signaling ongoing concerns about price stability.
• Growth Expectations: The 2025 GDP growth projection was trimmed to 1.4%, reflecting a cautious economic outlook.
• Future Rate Cuts: The central bank still anticipates 50 basis points in rate cuts before year-end, with rates projected to fall to 3.6% in 2026 and 3.4% in 2027.
What Does This Mean for Bitcoin and Crypto?
Historically, the relationship between Fed policy and Bitcoin is nuanced. When interest rates are high, investors often shift toward safer, yield-generating assets, which can dampen demand for riskier investments like crypto. Conversely, lower rates tend to boost liquidity and risk appetite, making assets like Bitcoin more attractive—especially as a hedge against inflation 1.
With the Fed signaling potential rate cuts later this year, many in the crypto community are watching closely. Lower rates could weaken the U.S. dollar and increase capital flows into digital assets, potentially setting the stage for a new crypto bull run if economic and geopolitical conditions align 4.
For now, Bitcoin’s steady performance suggests that the market is taking a wait-and-see approach, with traders positioning for possible shifts in monetary policy later in 2025.
