Bitcoin Surges 5% to $108,000 as Fed Holds Rates

Bitcoin has surged past the $108,000 mark, driven by the Federal Reserve's decision to maintain steady interest rates and growing institutional interest. The cryptocurrency's bullish sentiment is further bolstered by the anticipation of the Federal Open Market Committee (FOMC) meeting, where investors await guidance on monetary policy amidst mixed market sentiment and inflation fears. The market capitalization of the overall cryptocurrency market has reached $3.38 trillion, reflecting a sense of cautious optimism among investors.

The Federal Reserve's stance on interest rates has been influenced by sustained employment levels and inflation exceeding its targets. There is a 99.9% probability that the FOMC will maintain the status quo on interest rates, leaving a minuscule chance of a slight 25-basis-point reduction. This cautious approach is underscored by the need to evaluate the ramifications of trade tariffs and economic pressures before signaling any policy shifts. The Fed's resolve not to act hastily on rate cuts is seen as advantageous by some stakeholders, projecting sustained positive returns.

Technical indicators suggest that Bitcoin has shown strong resistance at the $100,000 level, hitting fresh all-time highs after overcoming this threshold. The significant drop in Bitcoin holdings on exchanges, which has fallen below the 11% mark, indicates a shift in investor behavior. More holders are moving their coins to digital wallets and cold storage, reflecting a growing long-term confidence in Bitcoin. This decrease in exchange-held Bitcoin is deemed bullish because it reduces selling pressure, as cryptocurrencies are usually kept in exchanges for liquidation purposes.

The migration of Bitcoin holdings from exchanges to institutional custodians has been accelerated by the approval of Bitcoin Spot exchange-traded funds (ETFs) in January 2024. Major asset managers, including BlackRock and Fidelity, have accumulated substantial Bitcoin reserves for their ETF products, often utilizing custodians like Coinbase. This movement has led to a reclassification of holdings, where assets previously counted as exchange balances are now under institutional custody. Banking giant JP Morgan recently revealed that it could accept Bitcoin ETF shares for loans, unlocking new credit lines. This development further underscores the growing institutional interest in Bitcoin and its potential to drive market dynamics.

Several converging factors have the potential to create a notable supply shock for Bitcoin. The most recent halving in April 2024 decreased the block reward from 6.25 BTC to 3.125 BTC, effectively halving the rate at which new bitcoins enter circulation. This reduction tightens supply, especially as demand continues to grow. The introduction of spot Bitcoin ETFs has provided institutional investors with a regulated avenue to gain exposure to Bitcoin. An increasing number of companies are incorporating Bitcoin into their corporate treasuries as a hedge against inflation and currency devaluation. As of June 2025, 80 firms collectively own around 3.4% of the total Bitcoin supply. Notable examples include MicroStrategy, which holds approximately 580,000 BTC, and GameStop, which recently invested $500 million into Bitcoin.

Global macroeconomic factors are also contributing to Bitcoin's bullish outlook. The U.S. Federal Reserve's monetary policies have led to an expected 18% increase in the global M2 money supply in 2025, from $107 trillion to over $127 trillion. This monetary expansion, coupled with a weakening U.S. dollar, enhances Bitcoin's appeal as a store of value. The decline in exchange-held Bitcoin reduces the immediate supply available for trading, potentially leading to decreased selling pressure. In economic terms, a lower supply amid steady or increasing demand can exert upward pressure on prices. With BTC reserves on exchanges hitting a 7-year low, it remains to be seen whether a supply shock will jumpstart the apex cryptocurrency to the next level as Bitcoin traverses the $105,216 level.