Fed holds rates steady amid 'elevated inflation,' while bitcoin continues to trade flat

Bitcoin's price held steady immediately after the U.S. Federal Reserve announced its decision to keep interest rates steady on Wednesday. The  Federal Open Market Committee (FOMC) did what many economists and traders predicted: It maintained the benchmark federal funds rate at the current range between 4.25% and 4.50%. 

"In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4.25% to 4.5%," the central bank said in a statement.

"Recent indicators suggest that economic activity has continued to expand at a solid pace," the statement said. "The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid, inflation remains somewhat elevated."

Regarding the possibility of further rate cuts, the central bank said, "In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook."

"The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals," the FOMC statement added.

"Pausing today allows the Fed to 'wait-and-see' how the economy evolves and I'd expect them to place value on this optionality," Wintermute analysts said. Fed Chair Jerome Powell is scheduled to hold a press conference at 2:30 p.m. ET.

Bitcoin edged up a modest 0.5% over the past 24 hours, while major altcoins like Ethereum and Solana slipped around 1% each. Meanwhile, the total cryptocurrency market capitalization declined by 2% during the same period.

Factors supporting the price of bitcoin

Despite Trump’s pro-crypto stance—evident in executive actions such as the repeal of SAB 121, the formation of a crypto council led by David Sacks, and early discussions around a strategic digital assets reserve—bitcoin remains in consolidation just above $100,000. 

"If bitcoin’s price holds above $100,000, which is a critical price point for bitcoin’s market health, it signals strength for the asset," 21Shares Crypto Research Strategist Matt Mena told The Block.

Mena said that looking ahead, market participants are pricing in two to three rate cuts for the remainder of the year.

"Two or more cuts could provide the kind of catalyst needed for bitcoin to break above $110,000 and test the next key psychological levels at $125,000 and $150,000," Mena said. "Historically, summer months tend to bring weaker price action across both traditional and crypto markets, but a decisive break above $150,000 ahead of summer would send a strong signal that bitcoin could be on track for $200,000 by year’s end."

In a note on Monday, Standard Chartered Head of Forex and Digital Assets Research Geoff Kendrick forecasted that institutional money would dominate the digital asset sector in the latter part of this year and reiterated the investment bank's price targets of $200,000 for bitcoin and $10,000 for ether by the end of the year.

In his analysis, Kendrick predicts the start of an alt-coin "light" season.

"I say light because institutional flows will drive bitcoin and ether, partly offsetting rotation into alts, I will look for new ETF winners (Litecoin?) and specific regulatory change winners (Uniswap?)," he said.