Fed maintains rates amid 'economic uncertainty' as crypto market eyes future policy shifts

In its first meeting since President Donald Trump took office, the Federal Open Market Committee (FOMC) maintained the benchmark federal funds rate at the current range between 4.25% and 4.50% and will slow its quantitative tightening.

"Recent indicators suggest that economic activity has continued to expand at a solid pace," the U.S. Federal Reserve said Wednesday in a statement. "The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated."

"Uncertainty around the economic outlook has increased," the statement continued. "The Committee is attentive to the risks to both sides of its dual mandate."

Beginning in April, the FOMC will slow the pace of the decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25 billion to $5 billion. It will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion. The committee projects two rate cuts by the end of the year.

Fed Chair Jerome Powell is scheduled to hold a press conference at 2:30 p.m. ET.

The CME FedWatch, which tracks the probabilities of rate changes as implied by 30-Day Fed Funds futures prices, projects a 16% chance of a rate cut in May with the odds increasing significantly in June. With traders now pricing in a higher likelihood of rate cuts later this year, risk assets such as cryptocurrencies, have seen renewed speculative interest.

"Polymarket bettors are predicting that the Federal Reserve is going to end its quantitative tightening before May, and now investors are already salivating at the prospect of quantitative easing," Nic Puckrin, financial analyst and founder of The Coin Bureau said in a statement. "But they will likely be sorely disappointed very soon."

While markets have struggled under recent economic uncertainty, Bitcoin has continued to outperform traditional assets.

Source: NYDIG report from March 14

Bitwise CIO Matt Hougan this week noted bitcoin’s historically worse performance during periods of significant SP 500 drawdowns, but that on average it subsequently rose 190% in a pattern he calls "dip then rip."

Crypto markets received a boost Wednesday morning after Ripple CEO Brad Garlinghouse said his company’s legal battle with the U.S. Securities and Exchange Commission has ended , helping to push XRP 12% higher. Bitcoin has moved up 3.5% over the past 24 hours, while altcoins like Ethereum and Solana rose between 7-9% according to The Block's price data .

After weeks of downward pressure on risk assets, some analysts anticipate a short-term relief rally.

"While we may be overdue from an oversold bounce in the market," Cox said, "my medium-term outlook is that today's meeting will have little effect on markets, and will ride in the backseat, while tariff narratives continue to steer us in the immediate future."

Bernstein analysts said the current cycle is "still in its early stages."

"We expect bitcoin to touch a $200,000 cycle peak towards 2025-end," the firm wrote this week in a note. "If 2025 markets remain jittery on macro and Trump disruption risk, we may see a delay in achieving our bitcoin cycle highs and we may see a potential elongated bitcoin bull cycle into 2026."