Fed Holds Rates Steady: Crypto Sees Modest Gain
1min read The Federal Reserve maintained its benchmark interest rate at 4.25%-4.50% on Wednesday, marking a 'hawkish pause' as inflation remains elevated and economic activity grows steadily. This decision follows three consecutive rate cuts in late 2024 but signals that policymakers remain cautious about premature monetary easing.
Despite the steady interest rates, major cryptocurrencies saw a modest uptick. Bitcoin, Solana, and XRP each gained nearly 2% in the hour after the news. This market optimism is likely driven by continued liquidity stability, as a pause in rate hikes is generally viewed as bullish for risk assets, including cryptocurrencies. Lower interest rates—or expectations of stable rates—make traditional fixed-income investments less attractive, driving investors toward higher-yielding assets like equities and crypto.
The Fed's statement indicated that inflation remains elevated and removed previous references to progress toward its 2% goal, suggesting that further rate cuts may not be imminent. However, steady employment levels and economic resilience reduce recession fears, supporting speculative assets like Bitcoin and other cryptocurrencies. President Trump had urged the Fed to continue cutting rates, but central bank officials chose to maintain their current stance.
The crypto market will closely monitor any signals of future liquidity expansion. Until the Fed shifts toward rate cuts or implements measures that increase monetary stimulus, altcoins are expected to underperform Bitcoin. Bitcoin, with its stronger institutional appeal and macro resilience, remains the safer bet in a hawkish monetary environment.
