The Federal Reserve’s upcoming FOMC (Federal Open Market Committee) meeting on May 7, 2025, is grabbing major attention from crypto investors.
While most experts think the Fed will keep interest rates the same, what Chair Jerome Powell says could have a big effect on both the stock and crypto markets.
The Fed raised interest rates sharply in 2022 and 2023 to counteract excessive inflation. However, since the end of 2024, it has gradually reduced rates, and the current rate is 4.25%-4.50%. The vast majority of individuals (about 94%) believe the Fed will not decrease interest rates right now. Nonetheless, investors are hoping for any hint of future rate reduction.
If Powell sounds careful and worried about inflation (what experts call “hawkish”), it could push Bitcoin price down to around $91,500 to $92,000, says market analyst King Baldwin. But if Powell hints that more rate cuts are coming soon, Bitcoin could jump back toward $100,000.
Even though the job market is strong, inflation is still a bit high. The Fed’s favorite measure, Core PCE inflation, is at 2.6%, and there’s a 60% chance of a recession, which keeps investors nervous.
Crypto expert Michaël van de Poppe believes there won’t be a rate cut this time. He says the Fed will be careful because inflation hasn’t come down enough. A surprise rate cut would shock the markets.
There’s also political pressure from Donald Trump, who wants the Fed to cut rates, especially with rising tariffs. However, the Fed is expected to focus on inflation, not politics.
As the traditional economy weakens, more people are buying Bitcoin as a safe haven asset. Experts have warned traders to avoid taking big risks and to be prepared for market swings in the aftermath of Powell’s talk.
In March, during the FOMC meeting, the Fed surprised markets by holding interest rates steady instead of cutting them, sparking a sudden spike in crypto prices. At the time, Bitcoin price surged past $87,000.
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