The cryptocurrency rally was paused on Tuesday ahead of Wednesday’s Federal Reserve decision.
Bitcoin briefly topped $76,000 overnight. BTC$74,525.08 It returned to around $74,000 during US trading and has risen slightly over the past 24 hours.
Most crypto stocks posted modest gains, with stablecoin issuer Circle (CRCL) and bitcoin miner BitDeer (BTDR) rising 5% and 12%, respectively. The Nasdaq rose 0.5% and the S&P 500 closed up 0.25%.
There is almost consensus that the Federal Reserve will keep the benchmark interest rate unchanged at 3.50% to 3.75% tomorrow. But given the sharp rise in oil prices and the potential inflationary impact of the Iran war, the focus shifts to Jerome Powell’s message and policy makers’ outlook for future interest rates.
Analysts at Bitfinex said the key question is whether policymakers are still hinting at a rate cut in 2026, or whether they are moving toward the idea of no further monetary easing. A more hawkish outcome could put pressure on risk assets due to a stronger dollar.
Mr. Powell’s views on recent oil expansion will also be a focus. Viewing this as a temporary shock will support sentiment, but viewing it as more stagflationary could limit the Fed’s flexibility.
On Wednesday, the February Producer Price Index report will also be released. The PPI typically doesn’t carry as much weight as the Consumer Price Index, but given the timing before the Fed meeting, it will likely be tracked a little more closely.
“A strong PPI number followed by a hawkish FOMC would be the most damaging combination for equities and risk assets,” the Bitfinex team continued.
According to Betru Lunde, head of research at K33, this background is already reflected in market expectations for a long-term upward trend in interest rates.
He said in a note on Tuesday that the probability of interest rates remaining unchanged until the July meeting has risen to more than 60% from 22% last month, pushing any chance of a rate cut further to the end of 2026.
For now, price trends are likely to remain subdued. “We expect the $74,000-$76,000 region to be a temporary price ceiling,” Bitfinex analysts concluded.
