On Wednesday, the U.S. Federal Reserve left interest rates between 4.25% and 4.5%— despite rate cuts in the last three meetings — in light of macroeconomic conditions.
The decision came amid ongoing debates about inflation in the U.S., with President Donald Trump urging the Federal Reserve to lower rates to stimulate growth and curb inflation. “We are inheriting a difficult situation from the outgoing administration," Trump said earlier this month, "and they’re trying everything they can to make it more difficult. Inflation is continuing to rage, and interest rates are far too high.”
However, the Federal Reserve noted that prices are still rising despite low unemployment and a strong labor market. “The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid,” the Federal Open Market Committee said after Wednesday’s meeting. “Inflation remains somewhat elevated.”
“This is in line with expectations and has been for a while,” said Mike Marshall, Head of Research at Amberdata, about the Federal Reserve’s decision.
Last month, Polymarket predictions forecast a high probability that the Federal Reserve would leave interest rates unchanged. Additionally, the CME FedWatch tool also estimated the likelihood of steady interest rates at 99.5% .
Analysts expect the Federal Reserve to maintain steady interest rates going into the next meeting, with Trump’s looming policies related to tariffs and immigration expected to play a major factor.
“The Fed is going to be driven by the impact of tariffs on inflation and the ongoing economic strength,” said Greg Magadini, Director of Derivatives at Amberdata.
"For crypto, I don’t see any major headwinds, but it also means we’re not getting a big wave of new liquidity in the short-term," said David Sedacca, Director of Finance at Parity, a blockchain infrastructure company. "The upside is that this decision gives us some clarity, allowing markets and investors to position for future rate moves. As we get more certainty, we could see crypto rallying ahead of the next shift.”
Others in the digital asset space are assessing what future interest rate changes may mean for cryptocurrency markets.
“[F]uture hikes may tighten liquidity, impacting risk assets like equities and Bitcoin,” said Alice Liu, Research Lead at CoinMarketCap. “Bitcoin’s correlation with traditional markets strengthens during macroeconomic uncertainty, potentially facing downward pressure if the Fed remains hawkish.
Historically, Bitcoin correlates with the S&P 500 when liquidity tightens, and risk sentiment weakens. However, if inflation remains high, Bitcoin’s role as a hedge could decouple it from traditional assets. A balanced approach could support stability and benefit both traditional and crypto markets, with Bitcoin consolidating in a stable environment, reducing volatility, and fostering growth as institutional adoption increases.”