Bitcoin is trading around $84,393.09, up nearly 4% following the Federal Reserve’s decision to leave interest rates unchanged and retain its target range of 4.25% to 4.5%.
Policymakers did not backtrack on rate cuts, but they did reiterate expectations for two cuts later in 2025 — a mixed signal for risk assets such as Bitcoin.
The markets had already predicted very little chance of a rate increase at the FOMC this week, but investors were following economic growth and inflation updates closely. The Fed has also cut its GDP growth forecast to 1.7% for 2025, a 0.4% point drop from its December projections, noting fears of a sluggish economy.
Inflation expectations also crept higher, emphasizing the Fed’s cautious approach. The Fed has also announced an additional slowdown of its “quantitative tightening” program, which has steadily been unwinding the central bank’s bond holdings. This step signals a more dovish orientation, but analysts say it may not be enough to spark a big rally in Bitcoin.
Stocks rose on Wednesday after the Federal Reserve kept interest rates unchanged and reaffirmed its outlook for rate cuts later in 2025.
The Dow Jones Industrial Average gained 300 points, up 0.7%, while the S&P 500 climbed 1%. The Nasdaq Composite led the rally, advancing 1.4%.
Matt Mena, a crypto research strategist at 21Shares, said, “Declining inflation could prompt the Fed to accelerate rate cuts, which typically provide more liquidity to the market, thereby boosting the prices of Bitcoin and other risk assets.”
