Fed Holds Steady, Crypto Market Reacts: Is the Next Wave Brewing?
On June 18, 2025, the Federal Reserve once again decided to keep its benchmark interest rate unchanged, maintaining the federal funds rate target range at 4.25%–4.5%. This marks the fourth consecutive pause in rate cuts, signaling that the Fed still isn’t ready to send a clear message of monetary easing to the markets. More importantly, despite the latest Dot Plot retaining expectations of two rate cuts this year, concerns about rising inflation, slowing economic growth, and growing internal division among Fed officials have cast fresh doubts over the credibility of this “path projection.”
But this time, the Fed’s inaction doesn’t just affect traditional financial markets — it could indirectly trigger a structural shift in the crypto market.
In recent years, crypto assets have become increasingly sensitive to macro policy signals. Every rate hike or cut, every Dot Plot update or inflation projection, sends visible shockwaves through Bitcoin, Ethereum, and other major crypto assets. Now, the combination of no rate cut and higher inflation forecasts is quietly stirring up a new tidal force beneath the surface: a resurgence in liquidity anxiety, rising risk-off sentiment, and a cyclical repricing of risk assets could soon arrive.
How Can Crypto Markets Find New Momentum Amid the Fed’s “Pause”?
- High Interest Rates Persist — Capital Still Hesitant to Flood Into Web3
By maintaining the current interest rate range, the Fed is signaling to traditional investors: “returns haven’t peaked yet, and dollar-denominated assets remain strong.” Under such conditions, large amounts of capital are likely to stay in safer, yield-bearing instruments like U.S. Treasuries, money market funds, and bank deposits. For crypto — especially the DeFi sector — this is clearly a bearish force:
Institutional clients will hesitate to enter the volatile token market;
On-chain capital activity remains muted, with DEX volumes continuing to shrink;
Fundraising costs for projects remain high, making it hard for new tokens to secure liquidity;
Yield-bearing stablecoin products lose appeal amid elevated fiat returns.
In short, structural tightening on the capital side will continue to cap the crypto market’s growth potential in the short term.
- Inflation Forecasts Revised Upward — Crypto’s “Inflation Hedge” Narrative Reignites
Though the Dot Plot still projects two rate cuts this year, Fed Chair Jerome Powell’s comment that “summer inflation could rise” has triggered renewed market concern. Core PCE is now projected at 3.0%, far above the earlier estimate of 2.1%, and investors are once again asking the classic question: Can the dollar still be trusted?
In this environment, gold is gaining momentum — and crypto assets, particularly Bitcoin, are regaining their “digital gold” status. Historically, every time inflation surges and fiat currencies face devaluation risk, capital seeks out alternative hedges:
Bitcoin hit an all-time high during the 2021 inflation spike;
Deflationary tokens like BTC, LTC, and BNB gained significant attention;
RWA-backed stable assets (e.g., gold or Treasury-pegged tokens) saw rising demand.
In other words, if the Fed’s inflation forecast materializes, crypto assets could reclaim the narrative of “store of value”, positioning themselves once again as institutional portfolio tools.
- Fed’s Internal Division Adds Policy Uncertainty — A Catalyst for Speculative Crypto Moves
According to the Dot Plot, the number of officials expecting two cuts this year has dropped from 11 to 10, while those expecting no cuts rose from 4 to 7. Although the median forecast remains unchanged, the internal divergence is becoming increasingly obvious — and uncertainty is exactly the environment where crypto speculation thrives.
In traditional markets, policy ambiguity typically suppresses risk appetite. In crypto, ambiguity and volatility create new opportunities:
Swing traders can deploy leverage around shifting rate cut/hike expectations;
Market makers and arbitrage bots earn more from volatile liquidity environments;
News-driven strategies (such as Fed statement auto-trading bots) can maximize profit windows;
And with fast-growing sectors like Layer2s, oracles, and AI+DeFi, nonlinear trading moves are even more likely.
- Stablecoin Demand and Global Liquidity Shifts — USDT and USDC Regain Dominance
The Fed’s decision to hold rates also means the dollar’s yield advantage remains intact. Global markets still regard the dollar as the anchor of liquidity. In the crypto stablecoin space, this creates a set of clear implications:
On-chain demand for USDT and USDC will rise, especially in emerging markets;
Non-USD stablecoins (e.g., EUR- or CNY-pegged) will struggle to gain traction;
Central bank CBDC programs may slow down;
Dollarization will deepen in cross-chain bridges and crypto payment protocols.
In DeFi, USDT and USDC will further solidify their role as trading pairs, collateral assets, and payment rails. Meanwhile, yield-generating RWA-backed stablecoins (e.g., USDe, sDAI) may benefit from the Fed’s extended pause — prolonging the high-yield window and attracting more user deposits and staking activity.
- Price Divergence: Will BTC Break Away from Traditional Risk Assets Again?
Although U.S. stocks and Treasuries initially rallied on Dot Plot news, they quickly reversed course, with all three major indexes ending lower. In contrast, the crypto market showed unexpected resilience — no major crash, and in some cases, even mild strength. This divergence could be a signal: markets are reassessing crypto’s correlation with traditional risk assets.
In the long run, if Bitcoin and others can hold onto their dual status as “hedge” and “high-growth,” the crypto sector may finally shake off its risk asset label — and achieve true asset class independence. For capital inflows, that’s a crucial step forward.
How Should Crypto Participants Respond to This “Policy Vacuum”?
Although the Fed is currently on hold, this policy vacuum period actually presents three types of opportunity windows for crypto participants:
- Strategically Accumulate Undervalued Quality Assets
Markets tend to act conservatively before rate cut signals are confirmed, often suppressing the prices of high-potential tokens. Now is the time to:
Focus on Layer2s (e.g., Blast, Linea) and AI+DeFi protocols (e.g., Arkham, Numerai);
Identify tokens near mainnet launches or major upgrades for swing trades;
Track institutional wallet movements for early entry signals.
- Explore RWA and DePIN Allocation Opportunities
The Fed’s pause doesn’t mean all assets are on hold. New narratives like RWA (Real World Assets) and DePIN (Decentralized Physical Infrastructure Networks) are gaining steam:
Tokenized products pegged to Treasuries and gold are growing rapidly;
Hardware-driven tokens like Filecoin and Render are gaining attention amid de-dollarization trends;
X Platform’s upcoming trading features may also direct new traffic into the crypto ecosystem.
- Reduce Leverage, Avoid Systemic Shock Risks
In high-uncertainty cycles, over-leveraged positions are at heightened risk of liquidation. Key strategies include:
Keeping fund utilization below 50%;
Avoiding “hype zone” tokens with extreme volatility;
Setting stop-loss/take-profit points to prevent macro shock events (e.g., CPI or non-farm payrolls) from triggering cascading risks.
Conclusion
The Fed’s pause may appear to “maintain the status quo” — but it actually hints at something waiting to erupt. For crypto markets, this is a period of both risk and opportunity:
On the one hand, uncut rates mean liquidity remains sluggish, limiting near-term breakout potential;
On the other hand, rising inflation expectations and policy division are creating new space for hedge-grade crypto assets.
Against this backdrop, your ability to correctly anticipate the turning point in medium-term expectations will determine which side of the next bull/bear cycle you end up on.
