The U.S. Federal Reserve (Fed) is meeting this week for a new interest rate decision, and the outcome seems almost predetermined. Tonight, on May 8, 2025, the Fed will announce its decision, but an interest rate cut appears highly unlikely. Investors are holding their breath, as a significant price movement for Bitcoin could be on the horizon.
This cautious sentiment stems from a mix of conflicting signals. On one hand, solid economic indicators, such as the addition of 177,000 new jobs in April, suggest economic resilience. On the other hand, President Trump's trade policies continue to stir economic unrest, with rising inflation expectations and declining consumer confidence as a result.
Vincent Reinhart, a former Fed official and now the chief economist at BNY Investments, explained that the central bank finds itself caught between waiting and anticipating. "The Fed must first see whether the trade policy remains in place and then how the market reacts to it," he stated. This ambiguous position compels Chairman Jerome Powell to keep all options open during his press conference.
As the weeks unfold, they will be crucial, especially leading up to the June meeting where new economic forecasts and the dot plot will be revealed. Recently, investor expectations have cooled; where there were once predictions of four rate cuts, the consensus now leans towards one or two cuts later this year. Major firms like Nuveen and Goldman Sachs foresee actions in the latter half of the year, possibly starting in September.
The Fed is likely to maintain its patient stance during this meeting, offering no dot plot or new growth forecasts, just a policy statement and Powell attempting to provide direction without overpromising. The dot plot illustrates how individual Fed members expect interest rates to evolve over the coming years.
While a direct rate cut is not what investors are anticipating, Powell's communication style tonight could significantly impact Bitcoin (BTC). The cryptocurrency market thrives on the prospect of looser monetary policy; cheaper money means more capital could flow into Bitcoin. If Powell remains cautious and vague, it might result in disappointment. However, any hint of impending easing could trigger a substantial rally.
The interest rate decision will be disclosed at 20:00 tonight, followed by Powell's remarks at 20:30. Meanwhile, Bitcoin has experienced a positive start to the day, rising by 2% over the past 24 hours, now hovering around $96,500. Its total market capitalization stands at $1.92 trillion, placing Bitcoin seventh among the world's most valuable assets, just behind Amazon and ahead of silver.
Though Bitcoin is still about 12% shy of its previous record of $109,000, Ethereum is also climbing, up 1% to approximately $1,800. Cardano has shown the strongest increase today, rising by 2.5%. The dominance of Bitcoin has now reached 64.2%, the highest level since 2021, as it outperformed altcoins significantly over the past 90 days.
The rise in Bitcoin's value has shifted investor sentiment, with the Fear & Greed Index moving towards 'Greed' and currently sitting at 'Neutral'. Investors and analysts are keenly awaiting the Fed's interest rate decision today. In March, the Federal Reserve held the interest rate steady at 4.50%, and only 1% of the market anticipates a 25 basis point reduction now.
In addition to the Fed's decision, there is news surrounding Myria (MYRIA), which is set to conduct a Token Unlock today, releasing 10.5 million additional tokens, an increase of about 20% of the circulating supply. Previous Unlocks have led to price surges, so investors are particularly alert.
However, the crypto market took a hit following the Fed's announcement. At 20:00 Dutch time, the bank revealed it would keep interest rates unchanged at 4.25% – 4.50%. This news, while expected, still resulted in a slight downturn in the market. In the hour leading up to the announcement, Bitcoin's price fell from $97,000 to a low of $96,300. After the announcement, it bounced back to $96,600 but then dipped again.
The policymakers unanimously decided to maintain interest rates for the third consecutive time. The official statement warned that the risks of higher inflation and unemployment have increased, placing the Fed in a challenging position. Like in previous months, it has opted to wait and see the impact of Trump's tariffs.
This decision has disappointed the crypto market, as lower interest rates are generally favorable for risky investments. Cheaper money tends to lead to increased capital flow into the markets, often resulting in explosive bull markets.
Despite this slight decline, Bitcoin remains 1.64% higher than it was 24 hours ago, currently priced at $96,596. Among altcoins, notable gainers include EOS, which surged 17.30%, Stacks up by 12.25%, and Zcash, which rose 8.64%. Other altcoins, however, are experiencing losses, with Virtuals Protocol down 7.39% and Fartcoin dropping 7.22%.
As the market continues to react to these developments, all eyes will remain on both the Fed's actions and the broader implications for the cryptocurrency landscape. Investors are eager to see how these factors will shape the future of Bitcoin and its peers in the coming days.
