#FedWatch Bitcoin price jumps as investors exhale following key Fed meeting

Investors welcome relief rally after a bruising few weeks.

The Fed issued a sobering new forecast.

Economist Mohamed El-Erian says a recession is more likely.

Crypto and equities markets jumped on Wednesday after the Federal Reserve opted to hold rates steady.

Investors breathed a sigh of relief after the US central bank remained on course to make two cuts to interest rates this year.

The move was expected: before Wednesday’s announcement, investors had put the chance of a rate drop at about 1%, according to the CME’s FedWatch tool.

Following the Fed’s statement, Bitcoin increased 1.3%, to $85,623, in mid-afternoon trading New York time, and Ethereum edged up 0.8% to $2,043,

Sobering forecast

Even so, the Fed’s economic forecast for the US was sobering as it released projections of slower growth and rising inflation in the US.

The Federal Open Markets Committee, or FOMC, revised growth projections for 2025 downward to 1.7%, from 2.1%.

And the FOMC revised its inflation projections upward to 2.8%, from 2.5% in December.

“Uncertainty around the economic outlook has increased,” the FOMC said in a statement.

After largely taming inflation stemming from the emergency spending taken during the Covid-19 pandemic, the Fed started cutting interest rates last year.

Investors in risk-on assets such as cryptocurrencies and stocks look for lower rates because it means the economy is growing and more money will rotate out of fixed income assets such as bonds.

But President Donald Trump’s commitment to 25% tariffs on Canada and Mexico, the US’ two top trading partners, plus China and potentially the European Union, has clouded the picture.