The Federal Reserve held its interest rates steady at 3.5 percent and 3.75 percent in its Wednesday meeting, delivering the outcome markets had largely anticipated.
Predictably, sentiment in traditional futures and prediction markets reflected near-unanimous expectations. Polymarket showed a 99 percent probability of no change, while conventional futures priced the likelihood around 95 percent.
Despite the pause, Bitcoin continued trending toward the $90,000 mark but soon saw a slump in the later hours of trading, signaling that investors were more focused on the Fed’s guidance than the rate decision itself.
With the adrenaline rush of the rate decision wearing off, market participants are now trying to find cues to what will impact the future trajectory of Bitcoin and the overall crypto markets.
Heads turned to future monetary policy: What did Powell say?
Javed Khattak, co-founder and CFO of cheqd, explained: “The sentiment was not necessarily on the decision itself but whether the Fed supports expectations for easier financial conditions ahead.”
Indeed, with the rate outcome already priced in, all eyes had turned to Chair Powell’s comments and whether the Fed would hint at a future shift toward looser monetary conditions.
The Fed’s statement and Powell’s comments also indicate that the U.S. economy is growing steadily, though with some bumps.
Price pressures from the imposition of tariffs may cause inflation in the short term; however, these pressures are expected to be tempered. The labor market is steady with slower hiring due to fewer people entering the labor force and lower immigration, and layoffs remaining low.
Overall, the Fed sees a stable economy, signaling a “steady as she goes” approach.
However, with a steady economy and little to no changes in market conditions, rates will stay the same for now, keeping the digital asset sector in doldrums for the near-future.
No rate cut could damage Bitcoin’s future trajectory
Since the economy is steady and markets aren’t showing major changes, the Fed is holding rates for now. This keeps the digital asset space quiet, with little momentum, as investors wait to see if future signals from the Fed might open the door for more growth or easier conditions.
Bitcoin price movements following the announcement were in line with this nuanced assessment. Bitcoin recorded a slight upswing due to a softer dollar and positive short-term market structure.
The dollar index, which tracks the U.S. dollar against a basket of six other currencies, declined to 95.5, its lowest in nearly four years. This reduced the dollar’s opportunity cost.
The immediate market response to the Fed announcement saw Bitcoin rise from below $88,000 to around $90,600. This was followed by a decline to the $86K to $87K range, which resulted in a wave of long liquidations in the process.
CoinSwitch Markets Desk said that while there was little resistance in the $88K to $89K range, there was an improvement in momentum in the short term. However, there was increasing liquidity in the $90K to $92K range, making the market highly sensitive to the Fed’s message.
Dean Chen, analyst at Bitunix added that the crypto market was focused not just on rates but on broader signals for the future: “Investors are closely monitoring Bitcoin ETF flow dynamics, options positioning, and macro currents like a weakening U.S. dollar, record-high gold, and mega-cap earnings. Total crypto market capitalization hovers around $3.02 trillion, and the market is assessing whether these signals will trigger renewed risk appetite or reinforce defensive positioning.”
CJ Burnett, Chief Revenue Officer at Compass Mining, highlighted another angle: “The Fed holding interest rates at current levels signals to markets that we’re in a holding pattern. It may be some time before we see another cut, but this also means Bitcoin miners can begin the 2026 capex cycle with confidence that financing costs will likely stay steady for the near-term.”
Overall, Bitcoin remains range-bound between $88,000 and $90,000, reflecting a market in “wait-and-see” mode.
Fed also in a middle of political rift
The U.S. Fed is not only in an economic dilemma but also a political one. President Donald Trump said Tuesday that he plans to pick a new Federal Reserve Chairman soon, a choice that could have big effects on the U.S. economy.
Trump has repeatedly criticized current Fed Chair Jerome Powell, saying he’s unfit for the job. To add more drama, Powell is also dealing with a criminal case filed by the Justice Department.
The next Fed leader will play a huge role in shaping interest rates, monetary policy, and overall market confidence, meaning Trump’s decision won’t just be a political move, it could ripple through the economy in ways everyone from businesses to everyday Americans will feel.
Singing the same tone.. Crypto markets will likely feel the brunt of the uncertainty in global financial markets, making it likely for volatility to seep in.
Rate paused, markets on hold
Tail risks remain on both sides, and short-term volatility is likely to stay elevated in the 3–5 percent range. Although the macro environment, including the weakening dollar and institutional adoption, is supportive, investors are paying close attention to the Fed’s tone with regard to its future plans, and guidance and tone are therefore the primary drivers of short-term price action.
As the crypto market reacts to the Fed’s messaging, one thing is certain: the rate pause itself was already priced in, and Bitcoin’s future will be driven less by the decision and more by the macro environment and any forward-looking guidance from the Fed.
If the Fed plans on rolling out rate cuts in the future, the investor optimism around Bitcoin could see a significant rise. A lower interest rate yields fewer returns on government securities like bonds, making volatile assets like Bitcoin more appealing to investors.