Crypto markets rise after Fed keeps interest rates steady

Bitcoin price surged from $82,300 to $86,300 on Wednesday. If BTC price declines, support can be found at $79,500, while resistance may be encountered at $86,700. 

Ethereum price surged from $1,920 to $2,040 after the Fed policy meeting on Wednesday. If Ethereum's price declines, it may encounter support near $1,820, while if it increases, it may encounter resistance near $2,150.

Bitcoin price registered a new all-time high of $109,135 in January but has since been under pressure by increased risk aversion sentiment. Expectations of a crypto-friendly US policy are providing support for crypto markets even as imminent global trade wars push crypto prices down. Bitcoin lost more than a quarter of its value since Trump’s inauguration marked its all-time high and the crypto market capitalization decreased by almost a trillion in the past month.

Trump has announced the creation of a national Bitcoin reserve, stressing his determination to make the US the crypto capital of the world. The US reserve will be created with Bitcoin already owned by the federal government through seizures due to criminal activities according to a statement by crypto Czar David Sacks. Fron now on, the US government will cease to sell Bitcoin and will stockpile it instead as a store of value. Bitcoin price, however, continued to retreat after Trump’s launch of a US Bitcoin reserve, as global economic concerns have lowered risk appetite. 

Cryptocurrency prices are also affected by central banks’ interest rates. High interest rates stifle economic growth, putting pressure on crypto markets. The US Federal Reserve kept interest rates unchanged at its policy meeting on Wednesday. FOMC policymakers voted unanimously to maintain the federal funds range to a target range of 4.25% to 4.50%. Policymakers remained cautious and opted to keep interest rates steady under a climate of economic and inflationary statements. 

The Fed, however, updated its ‘dot plot’, which is a summary of the central bank’s economic projections and reflects the central bank’s rate outlook. The latest FOMC dot plot indicated that FOMC members expect interest rates to reach a median value of 3.9% in 2025. This suggests that policymakers expect to deliver approximately two more rate cuts this year of 25 basis points each, raising market expectations of future rate cuts. Markets are pricing in two more rate cuts this year, with the first rate cut in June, while a third rate cut is also considered possible. 

Fed Chair Jerome Powell delivered a hawkish message after the policy meeting, stating that the central bank is not in a hurry to lower interest rates. Powell cited economic instability and elevated inflation risks due to trade tariffs as the reasons behind the Fed’s decision to keep interest rates steady.

Hostilities in the Gaza area were resumed this week, breaking the ceasefire deal between Israel and Hamas and promoting a risk aversion sentiment. Israel launched an airstrike in the Gaza area, killing more than 400 people and breaking the ceasefire deal. The Israeli government threatened that there was more to come, shuttering the peace in the region, and putting pressure on crypto markets. 

Most major cryptocurrencies are under pressure due to concerns that US President Donald Trump’s trade policies may start global trading wars. The uncertainty over Trump’s future policies and trade tariffs is generating a risk aversion sentiment, putting pressure on crypto markets. Trump’s tariffs are likely to raise global inflation and lower the economic outlook, thus promoting a risk aversion sentiment that puts pressure on crypto markets. Trump’s economic policies are also raising concerns that the US economic growth will slow down. Many analysts are already expressing concerns that the US will enter a recession.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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