As January comes to a close, the Federal Open Market Committee (FOMC) is ready to kick off 2025 with its first big interest rate decision.
Perhaps Fed Chair Jerome Powell will launch an official $JPOW token on Solana. Obviously.
Jokes aside, the FOMC meeting, scheduled for January 29, has markets waiting for the impact, especially Bitcoin holders, who are eyeing potential aftershocks in the cryptocurrency sector.
FOMC IN Focus Current interest rate expectations
So far, markets have been almost unanimous under Donald Trump’s presidency. The FOMC will keep interest rates locked at 4.25%—4.5% this month, with CME data indicating a 99.5% chance of no move.
The real action, however, may come later this year, as inflation eases and key indicators stabilize. Furthermore, rumors about possible rate cuts in the spring are becoming increasingly louder.
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Government data reflects a mixed picture in 2025. As Fed Governor Lisa Cook noted, employment is still high, with wage growth widely outpacing inflation. Yet inflation appears to be cooling.
The December consumer price index shows manageable levels, with core inflation rising slightly to 2.9% from 2.4% in September. If the downward trend in price pressure continues, a rate cut may not be far away.
Bitcoin awaits the FOMC’s next move
Federal Reserve Governor Michelle Bowman has remained firm against further rate cuts this month, citing persistent inflation and a resilient economy. “Given the lack of continued progress in reducing inflation and the continued strength of economic activity and the labor market, I could have argued for no action to be taken at the December meeting,” he said.
Governor Christopher Waller struck a more optimistic tone, pointing to a slight decline in core PCE inflation to 2.8% and signaling optimism for a continued slide toward the 2% target. “Further reductions will be appropriate if inflation trends towards our 2% target,” he noted during his January 8 speech.
Bitcoin, meanwhile, finds itself stuck between $100,000 and $110,000 as the cryptocurrency market holds its breath for the Fed’s next move. Analysts see little action until the FOMC verdict is delivered. “Assuming there are no surprises from the FOMC meeting, we will likely see Bitcoin trading sideways until the end of the month,” trader Krillin said.
We may also see cryptocurrencies rally following the announcement of a strategic Bitcoin reserve, which some expect to be announced today.
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There is also the possibility of further quantitative easing. If the Fed revives QE to inject liquidity, high-risk assets like Bitcoin could receive a fresh jolt like sticking a fork in an outlet.
The broader implications of high interest rates
The Fed’s rate decision for 2025 won’t just affect Bitcoin: It’s a high-stakes moment for risky assets at every level. A dovish stance could energize stocks and tech stocks, while a cautious Fed could leave markets catatonic.
The January result is a placeholder, leaving March and May as real battlegrounds. The stakes are higher than ever for Bitcoin, caught between institutional adoption and shrinking liquidity.
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