Will Powell Save Crypto Markets With A Surprise January FOMC Rate Cut?

January’s wrapping up, and the Federal Open Market Committee (FOMC) is set to kick off 2025 with its first big decision on interest rates.

Bitcoin clawed back nearly 4% in the past day, while XRP stole the show with a sharp 12% gain. Altcoins like Cardano, Solana, and Dogecoin didn’t lag far behind, stacking up to 4% gains each.

Maybe at this year’s FOMC, Fed Chair Jerome Powell will also launch an official $JPOW token on Solana. That would be fun!

Jokes aside the FOMC meeting, set to end January 29, has markets bracing for impact—none more anxious than Bitcoin holders, who are eyeing potential aftershocks in the crypto space.

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FOMC IN Focus Current Interest Rate Expectations

The January 29 FOMC meeting looms with expectations of no rate changes as the Fed navigates stagflation and global uncertainty. Markets have already braced for this stalemate. Along it comes a volatile mix of AI advancements, shifting economies through Donald Trump’s tariff policies, and the growing allure of leveraged crypto ETFs.

So far, markets have been choppy trying to understand President Donald Trump.

The FOMC will likely keep interest rates locked at 4.25%—4.5% this month, with CME data placing a 99.5% likelihood of no movement.

(FOMC)

Economic signals in 2025 paint a fragmented picture. Employment roars ahead with wages outstripping inflation, while December’s CPI suggests price hikes are under control.

Core inflation bumped to 2.9% from 2.4% in September but remains within reach of the Fed’s comfort zone—potentially paving the way for an unforeseen rate cut.

QCP Capital drew a parallel to the Year of the Snake, saying resilience and wisdom will be the key tools in navigating the forces playing out this year.

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Bitcoin Awaits the FOMC’s Next Move

One Federal Reserve Governor, Michelle Bowman, lambasted the idea of any rate cuts this month, citing stubborn inflation and a resilient economy.

“Given the lack of continued progress on lowering inflation and the ongoing strength in economic activity and the labor market, I could have supported taking no action at the December meeting,” she said.

Governor Christopher Waller struck a more hopeful tone, pointing to a slight dip in core PCE inflation to 2.8% and signaling optimism for a continued slide toward the 2% target.

Bitcoin, meanwhile, finds itself wedged between $100,000 and $110,000, as the crypto market holds its breath ahead of the Fed’s next move. Analysts see little action until the FOMC verdict drops. “Assuming no surprises from the FOMC meeting, we are likely to see Bitcoin trading sideways until the end of the month,” said trader Krillin.

The Broader Implications of High Interest Rates

The Fed’s 2025 rate decision won’t just affect Bitcoin—it’s a high-stakes moment for risk assets across the board. A dovish stance could energize equities and tech stocks, while a cautious Fed might leave markets catatonic.

January’s outcome is a placeholder, leaving March and May as the real battlegrounds. The stakes are sharper than ever for Bitcoin, caught between institutional adoption and shrinking liquidity.

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