FOMC Keeps Rates Paused, BTC Surges Passed $85k!

Today's FOMC meeting delivered no surprises, as the Federal Reserve opted to keep rates steady at 4.25-4.50%. Still, the decision is sending ripples through markets—and Bitcoin is no exception. Last week’s market correction saw BTC briefly dip to $76.5k, while the S&P 500 slid to $5,500—both reflecting growing concerns over recession risks and slowing GDP growth. Investor sentiment remains fragile as rate-cut expectations have shifted dramatically. Just last week, markets were pricing in a 50% chance of a May cut, but that probability has now plunged to just 15%. Expectations for multiple cuts by year-end have also taken a hit, with the odds of four rate cuts dropping nearly 10% week over week.

Fed Chair Jerome Powell emphasized in today’s press conference that “inflation remains a concern, but we’re prepared to act if growth falters,” signaling a cautious stance that initially kept markets on edge. However, he also announced that the Fed would significantly slow the pace of its balance sheet reduction, with the monthly runoff of Treasury securities declining from $25 billion to just $5 billion—a move widely interpreted as a signal that quantitative tightening may be nearing its end. This led many investors to believe that a return to quantitative easing could follow soon, igniting a surge in risk assets.

Both Bitcoin and equities rallied, with Bitcoin finally breaking through the stubborn $85k resistance during the FOMC Press Confernce, while the S&P 500 surged past $5,670 and managed to close above this key level for the first time in over a week—both signaling a potential shift in risk appetite.

Figure 1: BTC’s Price the Day of the FOMC Interest Rate Decision (1-Minute Intervals)

Source: 21Shares, Tradingview

In the near term, Bitcoin’s outlook appears more constructive. With the Fed signaling patience on rate cuts, liquidity conditions are likely to stay tight, but today’s breakout suggests improving sentiment. Bitcoin’s next major test will be the $90k and $95k resistance zone, while Ethereum has already reclaimed the key psychological level of $2k.

Meanwhile, the broader macro environment continues to support a bullish case for BTC. Declining energy costs, easing inflationary pressures, and the increasing likelihood of a Fed pivot toward rate cuts—or even a resumption of Quantitative Easing (QE)—could inject fresh liquidity into the market. This would create a more favorable environment for Bitcoin and other risk assets.

Figure 2: BTC’s Price vs Fed Finds Rate 

Source: 21Shares, Tradingview, Federal Reserve Bank of St. Louis

A key sentiment indicator for geopolitical stability remains the price of oil. Historically, oil has served as a barometer for global tensions—spikes indicate uncertainty and supply disruptions, while sustained declines often signal de-escalation. Recently, oil prices have been in free fall, suggesting that markets are increasingly pricing in progress toward a resolution in the Russia-Ukraine conflict. A further de-escalation could reduce macro uncertainties, strengthening the case for risk assets like Bitcoin.

Another major development to watch is how the U.S. government approaches Bitcoin acquisitions for its strategic reserve—whether through direct market purchases or mining. The Strategic Bitcoin Reserve (SBR) executive order mandates a structured plan for Bitcoin accumulation, introducing a significant source of sustained buying pressure. This move could trigger a global game-theory dynamic, encouraging other nations to follow suit, injecting billions into the market, and accelerating adoption. Additionally, by removing potential selling pressure, the SBR initiative acts as a continuous demand driver, reinforcing Bitcoin’s long-term bullish trajectory.

Beyond direct purchases, if the U.S. government chooses to mine Bitcoin instead of buying it outright—and holds rather than sells—it could drastically shift supply dynamics. This would eliminate a major source of potential sell pressure from miners, further tightening available supply. A potential partnership with large U.S. Bitcoin miners in a joint-mining venture wouldn’t just enhance Bitcoin’s legitimacy but could also reshape global perceptions of BTC as a strategic asset.

Regardless of the Fed’s near-term stance, its decisions will remain a key driver of BTC’s trajectory. With Bitcoin breaking key resistance levels and equities following suit, market participants appear to be positioning for the next leg higher. If macro forces continue to align in Bitcoin’s favor, BTC could be on track to surpass its previous all-time high of $108.5k and potentially push toward $150k.

Figure 3: Nation States Holding BTC

Source: 21Shares, Arkham Intelligence

*reported amount, not confirmed