The cryptocurrency market experienced a notable decline after the Federal Reserve announced it would hold interest rates steady between 3.5% and 3.75%, yet flagged inflation concerns that could lead to future rate hikes. Bitcoin fell about 4% to near $64,000, pulling the broader crypto sector downward in the wake of the hawkish tone from the central bank’s first policy meeting under new chair Kevin Warsh.
The Fed cited persistent inflation—remaining well above its 2% target—partly fueled by ongoing supply chain shocks, especially in energy-related sectors. This outlook was reflected in the Fed’s so-called “dot plot,” with half of the board members anticipating at least one rate increase before the end of the year. The prospect of tighter monetary conditions and more expensive borrowing typically weakens risk appetite, which contributed to the crypto sell-off.
The slide in Bitcoin price marked a potential peak for the recent rally, with the market approaching key support levels between $62,000 and $60,000, which had earlier arrested pullbacks. Bitcoin was on track to finish its third consecutive day of losses as the downward pressure continued. Ethereum and XRP also recorded declines, with ETH dropping 2% and XRP down 2.5%, pushing their recent cumulative losses further into negative territory.
These price movements coincided with a broader market retreat, as U.S. equities also closed lower following the Fed statement. However, early trading the following day hinted at a slight recovery in stocks, creating the possibility that crypto could follow a similar rebound pattern.
Experts remain cautious yet optimistic. A senior crypto strategist at 21Shares noted that while the interest rate pause was anticipated, Bitcoin remains structurally positioned to revisit $100,000 in the third quarter after a period of consolidation. The analyst highlighted key resistance levels at $70,000, $75,000, and $80,000 that Bitcoin needs to overcome to keep the upward momentum alive. Additionally, if historical four-year cycles apply, Bitcoin’s price may bottom around the third or fourth quarter, signaling the start of the next sustained bull run.
In contrast, short-term traders have actively hedged against further declines, increasing bearish put option volumes targeting the $62,000 to $60,000 range. This indicates sophisticated market participants are bracing for a potential correction before recovery.
Overall, despite the Federal Reserve’s hawkish signals and the immediate market reaction, there is cautious confidence that Bitcoin and the crypto market will find support near current lows, with potential for significant gains in the months ahead.