Fed holds rates steady, Bitcoin gains as market reacts

The Fed keeps interest rates at 4.25%-4.50%, boosting Bitcoin, Solana, and XRP, while altcoins may struggle without clear signs of future liquidity expansion.

The Federal Reserve kept interest rates steady at 4.25%-4.50%, signaling caution on easing monetary policy. While steady rates usually slow down investments in high-risk assets, major cryptocurrencies saw a small boost, with Bitcoin, Solana, and XRP rising about 2% after the announcement.

This decision follows three rate cuts in late 2024 but suggests policymakers are not yet ready for further reductions. The Fed’s stance means capital won’t flow quickly into speculative markets, but a pause in hikes is generally positive for risk assets, including crypto. When interest rates stay high, traditional investments like bonds remain attractive, keeping investors cautious about riskier bets. However, if rates stay stable or eventually decline, crypto could benefit from increased liquidity.

Market reactions were mixed. Some analysts see this as a "hawkish pause", indicating the economy is stable enough to avoid aggressive tightening. This environment can support crypto markets, which rely on liquidity and investor confidence.

Despite keeping rates unchanged, the Fed removed references to progress toward its 2% inflation target, suggesting further cuts aren’t coming soon. However, strong employment numbers and steady economic growth reduce fears of a recession, supporting speculative assets like Bitcoin.

President Trump had urged the Fed to continue cutting rates, but policymakers decided to hold their current position. The crypto market will now closely watch for any signs of future liquidity expansion. Until then, altcoins may struggle compared to Bitcoin, which remains the safer option due to its strong institutional backing and macroeconomic resilience.