The US Federal Reserve (Fed) has just decided to keep interest rates in the range of 4.25%-4.5% at the latest meeting, while forecasting slower growth and higher inflation in the near future. This immediately creates strong impacts on the financial markets, including the cryptocurrency market.
📌 The current USDX exchange rate on #FXCE is 103.36 – reflecting the strength of the USD against a basket of major currencies, increasing pressure on risk assets like crypto.
So, how might this Fed decision impact Bitcoin, Ethereum, and the entire cryptocurrency market?
1. High Interest Rates And Negative Impacts On Crypto
The Fed not cutting rates means borrowing costs remain high, hindering cash flows into risk markets like cryptocurrencies.
💡 Why?
High interest rates -> Strong USD -> Bitcoin and altcoins face sell-offs.
Institutional investors prioritize bonds and stocks instead of pouring funds into crypto.
Speculative cash flows are decreasing, causing Bitcoin to struggle in the $65,000-$70,000 range.
Market data also reflects this: The S&P 500 has dropped over 10% since mid-February, indicating that market sentiment is no longer overly optimistic.
2. Concerns about inflation – Is Bitcoin seen as 'digital gold' again?
Although #Fed maintains interest rates, they also adjusted the 2025 inflation forecast to 2.8% (from 2.5%). This indicates the Fed is increasingly concerned that inflation may last longer than expected.
📈 In this context, Bitcoin may benefit:
✅ BTC is often seen as a hedge against inflation, especially when the USD shows signs of weakness.
✅ Major institutions like BlackRock and Fidelity continue to accumulate Bitcoin.
However, Musk warns about the 'magic money machines' in the US government, arguing that Washington's strong spending policies may continue to weaken the USD. If the Fed has to make significant adjustments in the future, Bitcoin may be a safer haven compared to traditional assets.
3. The crypto market may experience significant volatility in the upcoming period
🔍 Possible scenarios:
If the Fed continues to keep interest rates high: The crypto market may experience short-term corrections, with Bitcoin struggling to surpass $70,000.
If the Fed cuts interest rates by the end of the year: BTC could surge as cash flows back into risk assets.
If concerns about rising inflation increase: Institutions may pour money into Bitcoin as a hedge against inflation, helping the price grow in the long term.
💡 Investor strategy?
DCA (dollar-cost averaging) Bitcoin when the price drops significantly.
Closely monitor the Fed's actions and inflation data.
USDX assessment: If #USDX falls below 100, crypto may have strong upward momentum.
Conclusion
✅ The Fed's decision to maintain interest rates puts pressure on Bitcoin in the short term.
✅ Rising inflation forecasts may strengthen confidence in Bitcoin as a store of value.
✅ Investors need to closely monitor the Fed, USDX, and institutional cash flows to make appropriate decisions.
🚀 Despite the immediate challenges, Bitcoin remains a strong defensive asset against economic risks. If the Fed is forced to change its policy in the future, crypto could be the biggest beneficiary.