The results of the Federal Reserve meeting tonight (March 20, 2025, at 2 AM) can be summarized in three points regarding their impact on cryptocurrencies:
1. Is money becoming expensive or cheap? Interest rate policy determines the rise and fall of the crypto market.
If the Federal Reserve says, "inflation is too high, we won't lower interest rates for now" (maintaining high rates), then the cost of money in people's hands increases, possibly leading to a sell-off of high-risk assets like Bitcoin, which may cause prices to drop in the short term.
However, Barclays Bank predicts there will be two rate cuts this year (0.25% in June and September). If the Federal Reserve hints at a rate cut tonight, the crypto market may rebound directly, like a feast after a long hunger.
2. Is the economy going to collapse? The crypto market may become a safe haven.
Currently, there is a 36% chance of a recession in the US, with negative GDP growth in the first quarter. Fund managers are already frantically selling US stocks (reducing positions at record levels). If the Federal Reserve admits the economy is struggling, these individuals may invest some of their money in the crypto market, especially in Bitcoin, often referred to as "digital gold," which could move inversely to US stock trends.
3. One word from Powell can shake the crypto market.
Pay close attention to Powell's speech tonight:
If he says, "Tariff policies will keep prices rising," then the narrative of Bitcoin as an inflation hedge becomes appealing, and large institutions may increase their positions.
If he states, "The unemployment rate is too high, we need to cut rates," the crypto market may rally alongside US stocks; if he doesn't mention employment issues, prices are likely to continue fluctuating.
The most likely scenario:
Short-term volatility will be severe, with Bitcoin fluctuating by 10% in either direction being normal. For those trading contracts, be cautious of liquidation risks.
Smaller coins (altcoins) may polarize; coins related to DeFi and Layer 2, which are linked to capital flow, are likely to experience greater volatility.
If the Federal Reserve's statements are ambiguous, the market will go crazier, and trading volumes in futures and options may skyrocket.
In simple terms: If the Federal Reserve is dovish (expectations of easing), it will be positive for the crypto market; if hawkish (continuing to tighten), it will be negative. The worse the economy, the more likely the crypto market will be treated as a casino or safe haven. It's best for ordinary people not to gamble on news and to wait for results before taking action. $BTC