The crypto rally took a break on Tuesday ahead of Wednesday’s Federal Reserve decision.
After briefly topping $76,000 overnight, bitcoin pulled back to around $74,000 during the US session, modestly higher over the past 24 hours.
Crypto stocks posted mostly modest gains, with stablecoin issuer Circle (CRCL), bitcoin miner Bitdeer (BTDR) standing out, rising 5% and 12% respectively. The Nasdaq closed up 0.5% and the S&P 500 rose 0.25%.
The Fed is almost universally expected to leave benchmark interest rates unchanged at 3.50%-3.75% tomorrow. But given rapidly rising oil prices and their possible effect on inflation thanks to the war in Iran, the focus is shifting to Jerome Powell’s messages and policymakers’ outlook for future interest rates.
Bitfinex analysts said the key question is whether policymakers are still signaling rate cuts in 2026 or moving toward the idea of no further monetary easing. A more hawkish outcome could weigh on risk assets by strengthening the dollar, they said.
Powell’s views on the recent oil boom will also be in focus. Treating it as a temporary shock would support sentiment, while a more stagflationary view could limit the Fed’s flexibility.
On Wednesday, the report from February’s producer price index will also be released. As a rule, without having nearly the weight of the CPI, the PPI will be watched a little more closely due to its timing ahead of the Fed meeting.
“A warm PPI number followed by a hawkish FOMC would be the most damaging combination for stocks and risk assets,” the Bitfinex team continued.
That background is already evident in the market’s expectations for a higher-longer interest rate path, according to Vetle Lunde, head of research at K33.
The likelihood of rates remaining unchanged through the July meeting has risen to over 60% from 22% last month, with potential cuts now pushed further into late 2026, he said in a Tuesday note.
For now, price action is likely to remain muted. “We expect the $74,000-$76,000 region to cap the price momentarily,” Bitfinex analysts concluded.
