January is over, and the Federal Open Market Committee (FOMC) is set to start 2025 with its first major decision on interest rates.
Perhaps Fed Chairman Jerome Powell will issue an official $JPOW token in Solana. clearly.
All kidding aside, while the market is bracing for the fallout from the FOMC meeting scheduled for January 29th, no one is more worried than Bitcoin holders who are keeping an eye on possible aftershocks in the crypto industry. There are no people.
FOMC IN focuses on current interest rate expectations
So far, the market has been nearly unanimous under President Donald Trump. The FOMC plans to keep interest rates unchanged this month from 4.25% to 4.5%, but CME data shows there is a 99.5% chance of no change.
But real action could come later this year, when inflation slows and key indicators stabilize. Furthermore, rumors of a possible spring rate cut are growing.
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Government statistics reflect the situation in 2025. As Federal Reserve President Lisa Cook pointed out, employment remains strong, with wage growth comfortably outpacing inflation. However, inflation appears to be calming down.
CPI remained at a manageable level in December, with core inflation rising slightly to 2.9% from 2.4% in September. If the downward trend in price pressures continues, a rate cut may not be far off.
Bitcoin waits for FOMC's next move
Federal Reserve President Michelle Bowman this month firmly opposed further interest rate cuts, citing stubborn inflation and a resilient economy. “Given the lack of continued progress in reducing inflation and the continued strength of economic activity and the labor market, we could support no action at the December meeting,” he said. That would be fine.''
Governor Christopher Waller struck a more hopeful tone, noting that core PCE inflation would decline slightly to 2.8%, signaling optimism that it would continue to fall toward the 2% target. “If inflation trends towards the 2% target, further cuts will be appropriate,” he said in a speech on January 8.
Meanwhile, Bitcoin is seen to be stuck between $100,000 and $110,000 as the crypto market holds its breath in anticipation of the Fed's next move. Analysts expect little action until the FOMC's verdict is released. “Assuming there are no surprises at the FOMC meeting, Bitcoin is likely to trade flat until the end of the month,” said trader Krillin.
Cryptocurrencies could also fuel the announcement of the Bitcoin Strategic Reserve, which some are expecting to be announced today.
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The possibility of new quantitative easing also looms large. If the Fed reinstates QE to inject liquidity, risky assets like Bitcoin could receive another shock that could hit an outlet.
Broader impact of high interest rates
The Fed’s 2025 interest rate decision will not only impact Bitcoin, but will be a make-or-break moment for risk assets as a whole. A dovish stance could buoy stocks and tech stocks, while a cautious Fed could put markets on edge.
Results for January are preliminary, the real battleground will be in March and May. The stakes in Bitcoin are tighter than ever, caught between institutional adoption and reduced liquidity.
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