The Federal Reserve decided to keep interest rates steady at 4.25%-4.50%. This move shows caution regarding easing monetary policy. Typically, steady rates can slow investments in high-risk assets. However, major cryptocurrencies like Bitcoin, Solana, and XRP saw a slight increase of about 2% following the announcement.
This decision comes after three rate cuts in late 2024. It indicates that policymakers are not ready for further reductions yet. The Fed’s current stance means that capital will not flow quickly into speculative markets.
However, a pause in rate hikes is generally seen as positive for risk assets, including cryptocurrencies. When interest rates remain high, traditional investments like bonds become more attractive. This situation makes investors cautious about taking risks. If rates stabilize or decline in the future, cryptocurrencies could benefit from increased liquidity.
Market reactions to the Fed’s decision were mixed. Some analysts interpret this as a “hawkish pause,” suggesting that the economy is stable enough to avoid aggressive tightening. This environment can support crypto markets, which depend on liquidity and investor confidence.
Although the Fed kept rates unchanged, it removed references to progress toward its 2% inflation target. This change suggests that further cuts are not expected soon.
