Crypto Prices Steady Ahead of Fed Decision, Market Eyes Powell's Speech

Cryptocurrencies experienced a period of consolidation on Wednesday, with prices showing no significant gains or losses as traders awaited the Federal Reserve’s decision on interest rates. Bitcoin fluctuated within the $82,000 to $83,000 range, while Ethereum and XRP recorded modest gains of 1.5% and 0.4%, respectively. The total crypto market cap dropped by 1.4% to $2.8 trillion. This analysis explores how the Federal Open Market Committee (FOMC) meeting could impact crypto prices.

The FOMC meeting is anticipated to be a major price mover across both cryptocurrencies and stock markets. Despite recent inflation data showing a cooling trend to 2.8%, 99% of investors expect that Fed officials will leave interest rates unchanged. Analysts note that the meeting will focus on policy uncertainty, as Fed officials deliberate whether inflation is on track to reach the 2% target. The market's attention will be on Fed Chair Jerome Powell's speech for clues on future rate cuts, especially with June and July meetings in sight. Powell’s tone and forward guidance will be crucial, as any hints on future cuts could significantly impact market volatility.

Powell’s speech may also provide insights into how policymakers view economic uncertainty caused by trade policies and tariff plans. The Bank of Japan has cited higher US tariffs as a reason for keeping rates steady, indicating the broader economic implications of such policies. Analysts predict that if Powell’s speech reveals a hawkish stance, it could lead to a decline in cryptocurrency prices. With no bullish catalyst in sight and top analysts predicting the end of the bull market, the bearish impact of zero rate cuts and Powell’s speech could extend into the second quarter of 2025.

However, there is optimism that the crypto market will recover in the long term. Polymarket odds of the Fed ending quantitative tightening by June 2025 have soared to 100%, and the CME prices in a nearly 60 basis points rate cut by year-end. This paves the way for a potential recovery in crypto prices in the second half of 2025. Popular analyst Crypto Rover notes that if Powell were to say something positive in his speech, it could cause a price explosion for stocks and cryptocurrencies. At the same time, trader Kale Abe believes that the bearish situation is almost entirely priced in, suggesting limited downside risk.

The Volmex Implied Volatility Index for Bitcoin and Ethereum has dropped, indicating fewer speculative trades ahead of the FOMC report. This further suggests that the market may have already priced in the event. Therefore, it is likely that cryptocurrency prices might continue trading within a tight range or drop slightly after the FOMC meeting. However, the crypto market is expected to perform well in the long term as investors anticipate at least two rate cuts in 2025.