empty
21.03.2025 02:11 PM
Fed's actions to keep BTC from falling? BTC seeks stability

This image is no longer relevant

Some analysts believe that the Federal Reserve's current monetary policy—particularly its decision to hold interest rates steady and slow down quantitative tightening (QT)—could provide meaningful support for Bitcoin. According to this view, the world's largest cryptocurrency no longer needs to fear hitting rock bottom. But not everyone agrees with that assessment.

On Wednesday, March 19, the Federal Reserve left interest rates unchanged at 4.25%–4.50%, citing ongoing economic uncertainty. The news sparked a slight uptick across major crypto markets.

However, following the decision, Bitcoin slipped 1.8% to $84,400. By Friday, March 21, BTC was trading at $84,150, remaining within a tight range.

Fed holds rates, hints at cuts – what does it mean for markets?

While many market participants anticipated the Fed's decision, hopes were high for a more dovish tone and rate cuts beginning in 2025. In its statement, the Fed suggested it expects to lower rates twice by the end of the year.

The Fed emphasized in its statement:

  • The US economy continues to grow.
  • Unemployment remains low and stable.
  • Inflation is still moderately high.
  • The monthly cap on Treasury redemptions will be lowered from $25 billion to $5 billion.
  • The cap on mortgage-backed securities will remain at $35 billion.

However, the Fed also noted that uncertainty in the economic outlook had increased, prompting it to monitor risks closely. Starting in April, the Fed will ease the pace of balance sheet reduction:

  • The monthly cap on Treasury redemptions will be lowered from $25 billion to $5 billion.
  • The cap on mortgage-backed securities will remain at $35 billion.

This effectively softens QT and signals a possible shift toward more accommodative policy. Analysts now widely expect two rate cuts by year-end.

This image is no longer relevant

Arthur Hayes, former CEO of BitMEX, argues that a slowdown in QT will support Bitcoin. With the Fed scaling back Treasury runoff starting in April, Hayes believes that QT is essentially over, a move that could ease liquidity pressures and benefit risky assets, including crypto.

However, Benjamin Cowen, CEO of ITC Crypto, disagrees. He contends that QT isn't over in principle and that the Fed is merely slowing the pace of liquidity withdrawal—from $60 billion to $40 billion per month.

How are markets reacting?

Even though rates remained unchanged, expectations for cuts have risen. Analysts now see a 16% chance of a rate cut in May and more than 50% in June.

The S&P 500, however, continues to face headwinds amid ongoing trade tensions. Nick Pakrin, an analyst at The Coin Bureau, noted that investors were hoping for a more accommodative policy, although the Federal Reserve did not appear to be in a hurry to restart its monetary stimulus measures.

Experts point out that the Fed typically refrains from aggressive stimulus until rates approach zero. For now, any increase in global liquidity may come more from China and Europe than the US.

Trump pressures the Fed; Powell stays the course

President Donald Trump has spent months pressuring Fed Chair Jerome Powell to cut rates, but Powell has held firm.

Nathan Cox, CIO at Two Prime Digital Assets, said that while Trump's trade wars were contributing to inflationary pressures, the Federal Reserve remained focused on macroeconomic data rather than political noise coming from the White House.

Should the Fed commit to easing, crypto markets could respond swiftly. "Bitcoin could hit $200,000 by the end of 2025," research firm Bernstein predicts. "But if economic instability worsens, that rally could be delayed until 2026."

This image is no longer relevant

According to data from crypto analytics firm CryptoQuant, sentiment in the Bitcoin market has dropped to levels not seen since January 2023. The company's Bitcoin Bullish Sentiment Index fell to just 20 points—the lowest reading in two years and well below the threshold needed to sustain upward momentum.

CryptoQuant warned that the deteriorating macroeconomic and cryptocurrency environment was lowering the chances of a sustained Bitcoin rally in the near future.

Historically, Bitcoin has needed a sentiment score above 60 to support major price increases. Prolonged periods below 40 have typically aligned with bear markets. If the index remains under 40 for an extended time, it could signal a deeper downturn.

Survey data from forecasting network MYRIAD suggests that 68% of respondents expect Bitcoin to stay above $83,000 through next week—but anticipate a pullback afterward.

Larisa Kolesnikova,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
l Kolesnikova
Start trade
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Markets on edge: Trump targets EU, inflation and China data in focus

Wall Street and European equity indices opened the week in the red, following losses across Asian markets on Monday. Investors are reacting to the latest bout of trade war rhetoric

14:48 2025-07-14 UTC+2

US Market News Digest for July 14

Donald Trump announced 30% tariffs on goods from the EU and Mexico. The initial market reaction was negative, but the S&P 500 partially rebounded thanks to gains in large-cap stocks

Ekaterina Kiseleva 14:36 2025-07-14 UTC+2

Markets on edge: Trump vs. EU, inflation and China data ahead

Wall Street futures and European shares dipped during Monday's Asian session as investors responded to renewed tariff threats from the United States. Despite the aggressive tone, many still believe President

Thomas Frank 10:40 2025-07-14 UTC+2

Stock Boom: Nvidia Crosses $4 Trillion, Bitcoin Not Lagging Behind, Dow and S&P Rising

Indices Rising: Dow Jones Up 0.43%, S&P 500 Up 0.27%, Nasdaq Up 0.09% Nvdia Ends Trading with Historical Valuation, Exceeding $4 Trillion Delta Positive Outlook Stimulates Aviation and Transport Sectors

Thomas Frank 08:37 2025-07-11 UTC+2

Nvidia Makes History: Market Rising, Company Capitalization Breaks $4 Trillion Ceiling

Indices Up: Dow Jones — 0.49%, S&P 500 — 0.61%, Nasdaq — 0.95% Nvidia Is the First Company to Reach $4 Trillion in Market Value AES Jumps on Sale Attempts

Thomas Frank 10:46 2025-07-10 UTC+2

US Market News Digest for July 9

US stock indices closed the session with modest moves: the S&P 500 edged slightly lower, the Nasdaq 100 posted a mild gain, and the Dow Jones slipped into negative territory

Ekaterina Kiseleva 14:03 2025-07-09 UTC+2

Trump Back in Action: 50% Copper Tariff, More Blows to China, EU

Trump Announces 50% Copper Tariff Announces New Tariffs on Semiconductors, Pharmaceuticals President Trump Says Talks with EU, China Are Making Progress Japan, South Korea Work Hard to Minimize Tariff Damage

Thomas Frank 09:49 2025-07-09 UTC+2

US Market News Digest for July 8

The US stock market shows restrained momentum amid uncertainty over Donald Trump's potential return to high tariffs. Although the US president has expressed a willingness to negotiate, market participants

Ekaterina Kiseleva 12:08 2025-07-08 UTC+2

Trade storm over Asia: Japan, Korea face 25% tariff hit

Japan, South Korea face 25% tariffs by Aug. 1 Australian dollar rises as RBA keeps rates on hold The pan-European STOXX 600 index (.STOXX) was unchanged at 543.22

Thomas Frank 10:52 2025-07-08 UTC+2

Canceled deals, fresh letters – marching toward trade chaos? Trader's calendar for June 7-9

Symbolically, it was on July 4, Independence Day, that Donald Trump signed what he himself called the "Big Beautiful Bill," which, according to the White House, will "fulfill campaign promises."

Svetlana Radchenko 14:07 2025-07-07 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.