Fed Rate Decision Steadies Markets, Crypto Rebounds to Hit $2.9 Trillion

The Federal Reserve has once again paused rate hikes under Trump’s leadership, keeping interest rates at 4.25%–4.50%. But that’s not the only big news. The crypto market wasted no time reacting, soaring back to a $2.9 trillion market cap. Now, all eyes are on what happens next.

However, the outlook for rate cuts has changed. Only 11 out of 19 FOMC members now expect at least two cuts this year, down from 15 in December. The Fed remains focused on inflation, economic growth, and job stability as it makes future decisions.

Here’s what the Fed’s latest move means for crypto, the economy, and the markets.

Fed to Slow Quantitative Tightening (QT) in April

Crypto analyst MartyParty pointed out that the Federal Reserve will slow its Quantitative Tightening (QT) program starting April 1st—just as he predicted. This means the Fed will reduce the pace at which it shrinks its balance sheet, signaling a shift in monetary policy.

As part of this plan, the Fed will lower monthly Treasury redemptions from $25 billion to $5 billion while keeping mortgage-backed securities (MBS) and agency debt redemptions at $35 billion. The goal is to stabilize financial markets while gradually reducing the Fed’s holdings.

Crypto Market Impact

One crypto analyst Fefe Demeny points out that Quantitative Tightening (QT) isn’t ending soon, despite some crypto traders expecting a bull run once Quantitative Easing (QE) begins. While, Powell confirmed that the Fed will slow QT again but extend it for a longer period, meaning liquidity won’t flood back into the markets as quickly as some hoped. 

Santiment noted that Powell confirmed expectations for two rate cuts later this year. However, the Fed now expects the economy to grow at 1.7%, lower than the previous 2.1% forecast. Inflation remains a concern, with new tariffs potentially delaying price stability.

Following the Fed’s announcement, both crypto and stock markets reacted positively. Santiment also noted that the crypto market may continue to follow the S&P 500’s movements, though altcoins could see more volatility.

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Before the Fed meeting, the crypto market was already climbing, reaching a $2.9 trillion market cap. Bitcoin surged past $85K, while ETH, SOL, and XRP gained 5%, 7%, and 10%, respectively. Investors are also eagerly awaiting Trump’s upcoming Digital Asset Summit (DAS) speech, where he is expected to share his stance on crypto policies.

Powell Warns of Economic Uncertainty

Despite the market rally, Fed Chair Jerome Powell cautioned that while the U.S. economy is strong, some consumers are struggling. Inflation, though lower than before, is still a challenge. Powell also warned that global economic changes and new tariffs could slow inflation control efforts.

However, he reassured that the Fed will closely monitor the situation and adjust policies as needed.

As the Fed walks a tightrope between inflation and growth, crypto keeps doing what it does best – keeping investors on the edge of their seats.

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