Crypto Market Faces Short-term Bearish Sentiment After Fed Left Interest Rate Unchanged Akin to BoJ

After the Bank of Japan (BoJ) held its uncollateralized overnight call rate unchanged on Tuesday, the Federal Reserve has followed a similar path. On Wednesday, Fed Chair Jerome Powell announced that the Fed Funds Rate will remain between 4.25 percent and 4.5 percent.

During his speech on Wednesday, Powell said that the near-term inflation expectations have moved up fueled by tariff wars. Earlier on Wednesday, President Donald Trump reiterated that the Fed should cut its benchmark interest rate and should be 2.5 points lower. 

What Next for the Crypto Market

The crypto market has experienced heightened bearish sentiment amid the ongoing Middle East crisis. With the Fed announcing its intent to continue reducing its holdings of Treasury securities and bonds, popularly known as Quantitative Tightening (QT), the short term bearish sentiment will likely persist.

“The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective,” the Fed noted.

Meanwhile, 12 Fed officials see at least one rate cut before the end of this year while 7 Fed officials expect a no rate cut before EOY. According to LSEG data, the U.S. interest rate futures have a 71 percent chance that the Fed will cut its rate in September. 

As Coinpedia has previously reported, the wider crypto market will likely experience an accumulation summer in the coming months before an epic rally before the end of this year. A similar narrative was coined by crypto analyst Benjamin Cowen, who predicted that the altcoin market will continue to bleed to Bitcoin in the coming months.