The cryptos market is once again in the midst of uncertainty, suspended from a single question: what will be the next decision of the American federal reserve? While Bitcoin oscillates under 85,000 dollars and the index for fear and greed of the crypto market collapses at 23, investors hold their breath. The meeting of the Federal Open Market Committee (FOMC) ends today, and all the attention is turned to Jerome Powell.
Pressure markets before the Fed verdict
For several days, Bitcoin and the main cryptos have experienced increased volatility, which has testified to increasing nervousness.
This morning, Bitcoin dropped below 83,000 dollars, before bouncing slightly at 83,450 dollars, while Ethereum, Solana and XRP alternate between low increases and drops. Ryan Lee, chief analyst at Bitget Research, underlines this dynamic and specifies that:
Bitcoin fell 0.2 % to set itself around $ 83,000, following a broader withdrawal from the Crypto market, while Solana, XRP and Dogecoin also experience a decline, while gold exceeds $ 3,000 on the ounce and the markets await the FOMC decision on March 19, 2025. Although Bitcoin has historically been ordered Macroeconomic coverage, its current divergence (drop in bitcoin while gold climbs) shows that it behaves more like an asset at risk, influenced by uncertainty around the monetary policy of the Fed, profits and a movement towards traditional refuge values. The outcome of the FOMC meeting could either promote a rebound if the tone is flexible, or accentuate the correction if the position remains restrictive, the short term of Bitcoin being now more linked to global economic signals than its role of digital gold.
The central element that worries investors is the position of the federal reserve on interest rates. Officially, consensus agrees on maintaining rates between 4.25 % and 4.5 %, but it is Powell's speech that will dictate the suite of events.
Here are the three possible scenarios that concern investors:
- Maintaining prudent rates and speeches: the Fed could choose not to shake up the markets, maintaining a neutral tone and recalling that the rates will remain high as necessary to counter inflation;
- A monetary relaxation signal: If Powell suggests that a drop in rates could occur earlier than expected, this would create an air call for risky assets, including Bitcoin;
- A more strict than expected speech: a firmer posture, which reaffirms the lack of drop in rates before mid-2010, could cause a leak of capital out of the crypto market, with a significant prices correction.
“We are not planning an immediate rate reduction,” said the president of the Fed in recent months. The latter highlights increased inflation and a still fragile economy.
However, a slight variation of its tone would be enough to trigger an immediate reaction in the markets
For the moment, investors remain alert, and scrutinize the slightest index which could point out a change of CAP of the Fed.
A crypto market at the crossroads
If the Fed maintains a firm and restrictive posture, the market could experience a new withdrawal, because investors would then favor safer investments as obligations.
Many analysts fear a tightening of liquidity, which would particularly impact assets at risk such as Bitcoin.
“Financial flows are starting to move towards European and Asian markets”, observed A capital QCP report, which suggests a displacement of capital outside of technological values and cryptos.
Conversely, if Powell evokes a possible monetary relaxation earlier than expected, the Crypto market could immediately react by a spectacular rebound.
The recent decrease in the Consumer Price Index (ICC) from 3.1 % to 2.8 % could serve as an argument in favor of future flexibility. If the FED suggests that rate reductions will occur before mid-2025, bitcoin and altcoins could benefit directly, which would again attract investors in search of high yields.
Powell's speech will condition market movements in the coming hours, and the extent of reactions could be brutal. A conciliatory approach would open the way to a new upward dynamic, and would strengthen interest in cryptos as a refuge value in the face of a possible economic recovery. Conversely, a hard and unambiguous line could mark the start of a new correction phase, which would test the resistance of the markets in the face of an inflexible monetary policy.
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