Bitcoin (BTC) has regained the significant $85,000 threshold following the Federal Open Market Committee (FOMC) meeting, where the Fed signaled a potential shift in monetary policy, including substantial interest rate cuts in 2025. The rally was sparked by the announcement from the Federal Reserve regarding plans to initiate a slowdown in quantitative tightening (QT) starting April 1, with Treasury securities shrinking from a monthly cap of $25 billion to $5 billion.
This announcement has led to a surge in global markets, particularly within the cryptocurrency sphere. Bitcoin's price jumped dramatically from $84,235.71 to nearly $86,000 before settling at $85,363 by press time, according to CryptoSlate data. The organic reaction was not limited to Bitcoin; other cryptocurrencies such as Ethereum (ETH) and Cardano (ADA) showed positive movements, albeit not as vigorous. Ethereum was priced at $2,039.11 with a 0.6% uptick, while Cardano managed a modest increase of 0.5%. Solana (SOL) even exceeded the $130 mark, trading at $133.55.
Federal Reserve Chair Jerome Powell addressed the media, clarifying that the decision to adjust the QT process should not be interpreted as a definitive policy shift. He emphasized this adjustment is more technical, aimed at ensuring a well-functioning market rather than a full-scale pivot in strategy.
The latest economic projections from the Fed unveiled a more cautious outlook on interest rate adjustments. The median forecast pegs the federal funds rate at approximately 3.9% by the end of 2025, down from earlier predictions. Nine policymakers anticipate two rate cuts this year, a reduction from the ten expected in December 2024. Concurrently, eight policymakers expect only one or no cuts, which reflects an increase from previously noted figures. Interestingly, two members foresee three cuts, a decrease from five in December, indicating varying perspectives within the Fed.
The longer-term outlook highlighted a steady prediction, with the median for the federal funds rate in 2026 estimated at 3.4%, dropping further to 3.1% in 2027. Meanwhile, the economic expectations have slightly dampened, with the projected GDP for 2025 revised down from 2.1% to 1.7%. Similarly, the unemployment rate projection edged up from 4.3% to 4.4% for the same year, highlighting concerns about a potential softening labor market.
The Fed also adjusted its inflation forecasts, now expecting the Personal Consumption Expenditures (PCE) inflation rate to reach 2.7% in 2025, a rise from the earlier 2.5% estimate. Core PCE inflation, excluding food and energy, is anticipated to rise to 2.8% from the previous forecast of 2.5%. This acknowledgment of rising inflation underscores the complexities faced by the central bank in balancing economic growth and inflation control.
During a post-meeting press conference, Powell addressed inflationary concerns that may stem from tariffs, pointing out that a notable portion of recent price increases could be attributed to tariffs. However, he also noted the long-term impact of these measures remains uncertain. Powell characterized tariff-related inflation as “transitory,” while admitting the assessment of their effects poses challenges.
The Federal Reserve's latest projections reflect a methodical approach to monetary policy, indicating a desire to maintain economic stability amid persistent inflationary pressures and slowing growth. The central bank's intention to moderate quantitative tightening while cautiously navigating rate cuts emphasizes its careful strategy in current economic conditions.
Bitcoin's growth is particularly remarkable, seeing it hold a market capitalization of $1.7 trillion and a trading volume of $32.82 billion within a 24-hour period as of 9:12 PM UTC on March 19, 2025. Currently, Bitcoin maintains a 60.67% dominance in the cryptocurrency market, valued collectively at $2.8 trillion.
Overall, this momentous shift in monetary policy and Bitcoin's impressive market performance showcase evolving dynamics within both traditional finance and digital currencies, underscoring a nuanced interaction between policy decisions and market responses.
