Bitcoin Soars After Fed Ruling About Banks — What Does This Mean for Crypto’s Future?
Written by
Lydia Kibet
Edited by
Amber Barkley
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Bitcoin surged to over $105,000 on Jan. 30, 2025, hours after the Federal Reserve announced that it would keep interest rates steady, with Fed Chair Jerome Powell saying in the Federal Open Market Committee (FOMC) meeting press conference, “Banks are perfectly able to serve crypto customers” provided that they understand and service the risks.
His statement renewed confidence in bitcoin and the broader cryptocurrency market, leading to a notable surge. So, what does this mean for crypto’s future?
Interest Rates and Crypto Banking
During the FOMC meeting, the Fed said that it would keep its benchmark rate unchanged, despite the pressure from the White House to cut rates. It maintained its Fed funds target rate in a range of 4.25% to 4.50%.
Powell attributed the rate pause to the economic resilience and persistent inflation. During the press conference, he described the economy as “in quite a good place,” pointing to the growing gross domestic product (GDP), stable unemployment rate, solid job gains and signs of inflationary pressure easing.
He pointed out that, while inflation has significantly eased from the 2022 highs of 9.1%, it remains at 2.9% annually, making future rate adjustments uncertain.
Powell’s acknowledgement of crypto banking services also signals a shift after years of caution surrounding the combination of cryptocurrency and traditional banks — the FDIC has discouraged banks from offering crypto-related services, according to Decrypt.
Market Reaction to the Fed’s Announcement
Steady rates are typically bearish for the crypto market, meaning capital will not flow into high-risk assets quickly. However, major cryptocurrencies like bitcoin, ethereum and solana saw a modest uptick hours after the news. This surge means there’s market optimism over continued liquidity stability. The stock market didn’t react well to the news, leading to sell-offs in nearly all industries led by tech.
Additionally, the rate pause suggests that stable economic conditions are sufficient to avoid aggressive tightening. This creates an ideal environment for crypto markets, which thrive on liquidity.
What Powell’s Statement Means for Crypto’s Future
The Fed allowing banks to serve crypto clients is bullish for the crypto market. Bitcoin’s price remained stable, consolidating around the $95,000 mark, through early to mid-February, but began dropping sharply on Feb. 24. Investors are watching closely to see if the Fed will lower interest rates, which could push bitcoin’s price to all-time highs.
Until the Fed lowers interest rates or implements measures that increase monetary stimulus, altcoins will likely underperform bitcoin. Bitcoin’s stronger institutional appeal and macro resilience remain the safer bet in a hawkish monetary environment.
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