Jerome Powell and the interest rate decision: what crypto traders need to know

This week, the Federal Reserve is set to decide on its monetary policy, and the crypto market is preparing to react. Although experts anticipate a hold on rates by the Fed, it is really Jerome Powell’s press conference that will make the difference. The central bank president will need to navigate between market expectations, controversial policy measures, and growing concerns about institutional independence.

Bitcoin, currently trading at $88.28K after a 0.97% decline over 24 hours, reflects this uncertainty. Traders scrutinize every word Powell says to understand whether the Fed will adopt an accommodative or restrictive stance in the face of current macroeconomic challenges.

No change expected, but Powell could surprise the crypto market

According to CME FedWatch futures contracts, the probability that the Fed will keep rates between 3.5% and 3.75% is 96%. This stability was signaled by Jerome Powell himself in December, when he indicated that the voting committee would delay any further rate cuts until 2026. Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, recently stated that he finds “far too premature” to cut rates again.

However, there is little suspense around maintaining the status quo. The real issue lies in the rhetoric Jerome Powell will adopt during his explanations. A simple technical justification for holding rates could strengthen the US dollar and exert downward pressure on Bitcoin and other risk assets. Conversely, a signal hinting at the possibility of further easing could likely support the crypto markets.

Accommodative signals or hawks: the crypto market bets on a cautious approach

The central question for investors is whether this pause signals a true accommodative pause—where cuts could resume soon—or a tightening by the Fed. Morgan Stanley predicts that Jerome Powell will maintain neutral language, mentioning “the range and timing of future adjustments,” which would preserve the possibility of further reductions in the future.

Dissenters will also be watched. Stephen Miran, appointed by Trump, is expected to express disagreement and advocate for a bold 50 basis point cut. An increase in dissenting voices could reinforce the accommodative scenario and support both Bitcoin and equities. JPMorgan, diverging from most observers, does not foresee any cuts in 2026, instead anticipating hikes the following year, while most other institutions expect one or two by the end of the year.

Trump measures and market volatility: what Powell needs to clarify

Jerome Powell will also need to address thorny questions regarding Trump’s initiatives on housing accessibility. The administration announced a $200 billion program for purchasing mortgage-backed securities, combined with a ban targeting large institutional investors from acquiring single-family homes. These measures risk preempting demand and reigniting inflationary pressures in the real estate sector, a topic that could complicate the rate trajectory.

According to ING’s analysis, Powell’s explanation for maintaining rates could paradoxically strengthen the dollar, thus dampening assets denominated in greenbacks like Bitcoin. Analysts note that “given the current robustness of US asset markets, Powell will have difficulty justifying that financial conditions are restrictive.” Such positioning would cool expectations of further rate cuts and support the dollar against low-yield currencies.

Meanwhile, Trump’s tariffs—already factored into market calculations—are expected to have a delayed inflationary impact in 2026, as import costs are passed on to consumers. This combination of factors creates increased volatility in both crypto and traditional markets, where every signal from Jerome Powell will be analyzed for its implications.

The Fed’s independence in question

Finally, Jerome Powell may face delicate questions regarding the DOJ investigation, which he considers a political retaliation for not cutting rates quickly enough according to Trump’s wishes. This tension highlights the structural challenges faced by the central bank in a politically contentious environment.

In summary, the decision itself on rates should move the market little. It is the tone and outlook Jerome Powell communicates that will determine whether Bitcoin and crypto assets can count on monetary easing in the horizon or if they will need to adapt to a prolongation of high rates. Crypto traders will closely monitor every nuance of his statements.