Fed Expected to Hold Rates, Crypto Traders Eye Dot Plot for Clues

The Federal Reserve is anticipated to maintain interest rates at their current level, with the decision to be announced on Wednesday at 2 p.m. EDT. This announcement is closely watched by crypto traders, who are particularly interested in the Fed's interest rate dot plot. This graphical representation shows each Fed official's projections for interest rates and could significantly influence market dynamics depending on the anticipated rate cuts.

The Fed's Open Market Committee, consisting of 12 officials, will reveal its decision on interest rates at 18:00 UTC on Wednesday, followed by a press conference with Chairman Jerome Powell half an hour later. Despite repeated calls from President Donald Trump for lower borrowing costs, the central bank is expected to keep interest rates unchanged within the range of 4.25%-4.50%.

Crypto traders are likely to focus on the interest rate dot plot, as the rate decision itself is considered a foregone conclusion. The dot plot will provide insights into the Fed's projections for future rate cuts. A hawkish outlook, indicating fewer rate cuts, could put pressure on bitcoin prices and the broader crypto market. Conversely, a dovish surprise could lighten the dollar and potentially unfreeze crypto's bid, according to a crypto trading and market-making firm.

Bitcoin's rally has already stalled above $100,000, with geopolitical tensions in the Middle East adding to the trade war-led inflation uncertainty. A hawkish dot plot could exacerbate this volatility, while a dovish outlook could provide some relief. The Fed's stance will also impact the U.S. fiscal situation, with a hawkish outlook potentially increasing debt servicing costs and affecting assets like gold and bitcoin.

According to the analyst's forecast, expectations for rate cuts have already declined sharply, from an initial 100 basis points to just 50 basis points currently. This revision is driven by a resilient labor market and inflation that, while moderated, remains above the 2% target. A prolonged conflict in the Middle East could further reduce anticipated cuts to just 25 basis points. This could put additional pressure on bitcoin and the broader crypto market, as a hawkish Fed could breed downside volatility in bitcoin.