The Fed is expected to announce its rate cut decision later this Wednesday.
As of now, market odds are 99.5% that the Fed will not cut today, so there should be no surprises.
All major cryptocurrencies are trading in the red after the Fed's big decision, with Bitcoin dipping by 0.8%. Solana (SOL) and XRP are the worst-performing coins in the top 10, dropping by 3.1% and 4.4% over the past 24 hours.
According to analyst Gordon Johnson, it is also likely that the Fed will indicate a hawkish tilt due to growing inflation since the central bank is now worried about inflation.
This might negatively affect cryptocurrency prices since risk assets tend to underperform when the Fed adopts hawkish rhetoric.
That said, December Fed futures show that three rate cuts this year could be the most likely development.
If there is any sign of policy softening, the markets are likely to react positively to this. Some analysts expect Bitcoin to potentially rally to a new record high if the Fed adopts a dovish tone.
Earlier this week, Bitcoin experienced a sharp pullback in tandem with the tech-heavy Nasdaq-100 index due to the DeepSeek "black swan." However, the cryptocurrency managed to recover in a relatively short amount of time.
The Nasdaq-100 is currency down 0.6% while the S&P 500 has dipped by 0.5%.
Gamza KhanzadaevJPMorgan strategist Abby Yoder recently told Yahoo! Finance that the market would be able to sustain momentum without a rate cut. "It doesn't seem like the US economy is particularly interest rate sensitive," she said.
Dan Burgin
Vladislav Sopov