The Federal Reserve kept interest rates unchanged on Wednesday, holding the benchmark rate between 4.25% and 4.50%. The decision extends a months-long pause on rate cuts, with officials projecting only two cuts this year instead of the four or five previously expected. Fed Chair Jerome Powell downplayed concerns about inflationary pressures from President Donald Trump’s tariffs, calling their effect “transitory.”
Bitcoin and other cryptocurrencies reacted positively, with Bitcoin rising more than 4% in 24 hours to $85,648, hitting a high of $85,890—its highest price since March 9. Ethereum climbed over 7% to $2,038, and Solana jumped 8% to nearly $134. The broader crypto market gained over 3%, bringing its total value to $2.91 trillion.
Bitcoin exchange-traded funds (ETFs) saw a rebound, attracting more than $500 million in net inflows over three days. The ARK21Shares Bitcoin ETF (ARKB), Fidelity Wise Origin Bitcoin Fund (FBTC), and BlackRock’s iShares Bitcoin Trust (IBIT) accounted for most of the inflows, with ARKB alone pulling in $180 million.
U.S. stocks also surged following Powell’s remarks, with the S&P 500 and Nasdaq both gaining over 1%. However, stocks and crypto had suffered earlier in the month due to uncertainty from Trump’s unpredictable tariff policies, which led investors to shift to a “risk-off” approach.
Bitcoin saw an immediate 3.2% increase after the Fed’s decision, reaching about $84,000. The crypto market remains highly sensitive to monetary policy shifts, as changes in interest rates affect investment flows into riskier assets. Analysts say market movements will depend on how inflation and rate cut expectations evolve in the coming months.
Inflation data shows a mixed picture. The Consumer Price Index (CPI) recorded a 2.8% year-over-year increase—above the Fed’s 2% target but indicating a slowdown. The upcoming Personal Consumption Expenditures (PCE) price index is expected to offer more clarity, with projections forecasting a 2.7% annual increase. Fed futures currently indicate a 51% chance of rate cuts in June.
The Fed’s rate pause follows a cut in September—the first in four years—which triggered gains in stocks and cryptocurrencies. Bitcoin and other digital assets saw further rallies after Trump’s election victory in November. Despite the recent market recovery, analysts warn that the crypto sector remains volatile and heavily influenced by Federal Reserve policies, inflation data, and broader economic conditions. Investors continue to watch for signals on future rate cuts, inflation trends, and the potential long-term effects of trade policies on markets.
