Bitcoin, Ethereum, XRP Dip as Fed Holds Rates: What’s Next for Crypto?

The cryptocurrency market took a hit after the U.S. Federal Reserve opted to maintain interest rates at 4.25%–4.5% in its first policy decision of 2025. This move, though widely expected, caused immediate declines in major cryptocurrencies, with Bitcoin leading the slump by shedding $1,000 within moments of the announcement.

Crypto Market Reacts to Fed’s Decision

At the time of writing, Bitcoin was trading at $103,000, reflecting a daily loss of 0.86% and a 1.29% decline over the past week. Similarly, Ethereum fell to $3,114, down 1.07% in 24 hours and 5% over the week. Meanwhile, XRP recorded a more than 5% drop on the weekly chart, reinforcing bearish sentiment across the crypto space.

Inflation Concerns Keep Fed on Hold

The Federal Reserve’s decision to hold rates steady comes amid persistent inflationary pressures. Despite recent Consumer Price Index (CPI) data suggesting inflation isn’t as severe as anticipated, Fed officials remain cautious, omitting previous references to “progress” in inflation control. This signals continued economic uncertainty, which could spell volatility for risk assets like cryptocurrencies.

With President Donald Trump advocating for lower interest rates to stimulate economic growth, tensions between the White House and the Fed are expected to rise. Trump’s administration has been vocal about its preference for looser monetary policy, but the Fed remains focused on long-term economic stability.

Trump’s Policies Add to Market Uncertainty

Adding to the turbulence, President Trump’s proposed economic policies—including potential tariffs on imports from Mexico and Canada—could disrupt global trade and fuel inflationary pressures. While tax cuts and deregulation efforts aim to boost economic growth, they may also make the Fed’s job of managing inflation more complex.

Historically, aggressive tariff policies have led to inflationary spikes, prompting the Fed to consider rate hikes rather than cuts. If this pattern repeats, riskier assets like Bitcoin and Ethereum could see more downward pressure in the near term.

What’s Next for Crypto?

With the Fed holding firm on interest rates and economic uncertainty looming, the crypto market may experience choppy trading in the short term. Traders will closely watch future Fed statements for signs of a potential shift in monetary policy. If inflation continues to ease, the possibility of rate cuts later in 2025 could provide relief to Bitcoin and other cryptocurrencies.

For now, investors should brace for volatility as macroeconomic factors continue to drive sentiment in the digital asset space. The ongoing battle between the Fed and the Trump administration could shape the trajectory of both traditional and crypto markets in the months ahead.

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