On May 7, 2023, the Federal Open Market Committee (FOMC) of the Federal Reserve announced that it would keep the federal funds rate unchanged in the range of 4.25% to 4.5%, in line with general market expectations. Although there were no changes to the policy, this decision had a significant impact on the cryptocurrency market. The price of Bitcoin (BTC) briefly fell to around $96,000 after the announcement, before quickly rebounding to above $98,000, demonstrating the market's high sensitivity to macroeconomic policy.

1. The Direct Impact of Federal Reserve Policy on the Cryptocurrency Market

The Federal Reserve's interest rate policy directly affects market liquidity and investors' risk appetite. In a high-interest-rate environment, investors are more likely to choose stable-return assets, such as government bonds, reducing their allocation to high-risk assets like cryptocurrencies. Conversely, a low-interest-rate environment typically increases market risk appetite and boosts interest in investing in high-volatility assets like cryptocurrencies.

Currently, the Federal Reserve's decision to keep interest rates unchanged, although expected, still has an impact on market sentiment. Investors are closely monitoring the remarks of Federal Reserve Chairman Powell to assess the direction of future monetary policy. If future economic data supports a rate cut, it could further boost the performance of the cryptocurrency market.