On Wednesday, Bitcoin remained close to $89,000 as the Federal Reserve decided to maintain interest rates, signaling an end to its rate-cutting cycle, while adopting a more measured approach regarding inflation and the labor market.
The price of Bitcoin initially exceeded $90,000 earlier in the session but later adjusted to approximately $89,500 as Federal Reserve Chair Jerome Powell addressed the media following the meeting.
This decision followed the Federal Reserve’s announcement to keep the benchmark federal funds rate unchanged within a range of 3.5% to 3.75%, thereby concluding a series of three consecutive 25-basis-point cuts implemented in September, October, and December.
The Federal Reserve’s choice indicates a growing comfort with the current economic trajectory, notwithstanding inflation levels remaining above the target. Policymakers attributed the decision to moderating job growth and persistent price pressures.
The Federal Open Market Committee (FOMC) voted 10–2 to hold the rates steady, with Governors Stephen Miran and Christopher Waller dissenting in support of an additional quarter-point cut.
Powell reinforced this perspective, stating that following a cumulative reduction of 175 basis points over the past year, the Federal Reserve now perceives its policy as nearing neutrality.
“It is challenging to review the incoming data and declare that policy is significantly restrictive at this moment,” Powell remarked, characterizing the existing stance as “loosely neutral or somewhat restrictive — it is subject to interpretation.”
This characterization is significant for market participants. Historically, Bitcoin has reacted positively to more accommodating financial conditions; however, Wednesday’s trading behavior indicated that investors were prepared for the FOMC’s decision, adjusting their expectations for near-term rate cuts instead of responding to overtly hawkish signals.
Powell adopted a balanced tone regarding the labor market, countering concerns about a dramatic downturn. He noted that recent payroll reports indicated an average job loss of approximately 22,000 per month, while private-sector hiring remained modestly positive.
He attributed slower labor supply growth to diminished immigration and participation rates rather than collapsing demand.
Regarding inflation, Powell identified tariffs as a significant contributor to elevated goods prices, characterizing their impact as predominantly “one-time” and not a consistent source of persistent inflation.
The core personal consumption expenditures inflation rate stands at 2.9% year-over-year through December, still above the Federal Reserve’s 2% target.
Powell suggested that the anticipated effects of tariffs on goods prices are nearing their peak and should subsequently decline, contingent on new trade actions.
For Bitcoin traders, Powell’s commentary reaffirmed a familiar narrative: the Federal Reserve is not aggressively tightening its stance but is also not poised to implement further stimulus in the immediate future. This middle ground has facilitated Bitcoin’s capability to maintain recent gains while limiting immediate upward potential linked to expectations of rapid rate reductions.
Implications of Fed Chair Succession
The question of succession also loomed large during the meeting. When prompted for advice to his potential successor, Powell provided a succinct three-part response: refrain from political involvement, maintain engagement with Congress, and honor the institution’s staff.
“Steer clear of elected politics. Avoid it,” Powell emphasized, highlighting the necessity for the Federal Reserve to preserve its independence amid increasing scrutiny, including an ongoing Supreme Court case concerning the central bank.
Both Waller’s dissent and Miran’s impending departure have ignited speculation regarding the Federal Reserve’s future leadership and policy direction, a dynamic of growing interest to cryptocurrency markets attuned to shifts in monetary philosophy.
According to Treasury Secretary Scott Bessent, Trump’s selection for Federal Reserve chair may be announced within one to two weeks, as reported by Yahoo Finance.
In betting markets on Polymarket, Rick Rieder currently leads the odds at approximately 37% to become the next Fed chair, followed by Kevin Warsh at around 28%, with Christopher Waller trailing at approximately 15%.
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