Will Crypto Market Crash Today After Federal Reserve Interest Rate Decision?
Highlights
- Fed likely to keep rates at 4.25%-4.5%, delaying cuts until mid-2025.
- High rates may trigger a crypto market crash due to liquidity tightening.
- Hints of future cuts could boost Bitcoin and altcoins amid rising risk appetite.
The cryptocurrency market is monitoring the upcoming Federal Open Market Committee (FOMC) meeting, which is set to conclude today. Investors are awaiting the Federal Reserve’s stance on interest rates, as any adjustments could influence the crypto market.
Federal Reserve Expected to Hold Interest Rates Steady
The Federal Reserve is widely expected to maintain the current interest rate range between 4.25% and 4.5% after its March meeting. Despite ongoing speculation about potential cuts, Federal Reserve Chair Jerome Powell has consistently indicated caution in adjusting rates. Powell points to inflation concerns and global economic uncertainties.
Some economists suggest that rate cuts may not occur until later in the year. Consequently, Fed rate cuts are projected around June 2025, as inflation remains a focal point of monetary decisions. Powell’s post-meeting press conference at 2:30 p.m. ET is expected to provide further insight into the Fed’s future approach.
With the Federal Reserve’s FOMC meeting expected to conclude today, crypto investors remain on edge about interest rate decisions. While market analysts predict that rates will stay unchanged, uncertainty surrounding inflation, trade policies, and economic growth continues to fuel volatility.
Crypto Market To Crash?
Bitcoin (BTC) has been fluctuating around $85K as the crypto market is in a volatile phase before the FOMC announcement. Many traders believe a crypto market crash could follow if the Fed signals a prolonged period of high interest rates.
Specifically, higher interest rates usually benefit more traditional types of investments such as bonds and savings accounts. As a result of this, capital is leaked from riskier assets such as cryptocurrencies. Conversely, rate cuts can boost liquidity and drive more money into speculative assets, including Bitcoin and altcoins.
But the Fed has stayed hawkish for a while, keeping rates higher, in order to curb inflation. Under these conditions, the crypto market is struggling, and a lot of investors are expecting relief from rate cuts in 2025. While inflation seems to be cooling, with the U.S CPI falling from 3.1% to 2.8%, this may not be enough to stop the Fed easing its policy.
Incase the Federal Reserve signals that rate cuts are approaching, a surge in altcoin prices could follow. This is because increased liquidity would likely encourage higher risk appetite among traders.
However, if the central bank keeps rates high for an extended period, crypto markets may decline. Tightening financial conditions could drive further losses.
With investors awaiting Powell’s remarks, the next 24 hours could determine whether the market stabilizes or experiences a crypto market crash.
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