Hello future millionaires! I will provide an explanation about the behavior of the crypto market with the Fed's decisions!
😉 First: the market does NOT react to the fact, it reacts to the expectation
The financial market (including crypto) anticipates.
👉 If the market already expects the Fed to keep interest rates, this:
Is already "priced in"
Does not cause an automatic drop
📌 What brings down the market is negative surprise, not expected decision.
📉 When can keeping interest rates bring down crypto?
❌ Bad scenarios for crypto:
1️⃣ The market expected a cut, but the Fed:
Keeps
And still speaks tough (“hawkish”)
2️⃣ The Fed signals:
“High rates for a longer time”
Strong concern about inflation
No rush to cut
💥 Result:
Dollar rises
Long-term rates rise
Risky assets (stocks and crypto) fall
📈 When does keeping interest rates NOT bring down (or even help)?
✅ Neutral or positive scenarios:
1️⃣ The market already expected maintenance
2️⃣ The Fed keeps, but the speech is:
Gentler (“dovish”)
Acknowledges slowdown
Opens space for future cuts
💥 Possible result:
Market rises on “relief”
Crypto can even rise
📌 This happens A LOT:
“Kept, but spoke well” = market rises
🔑 What matters more than the rate itself?
1️⃣ The speech (forward guidance)
What the Fed signals for the coming months
2️⃣ The dot plot
Where the members themselves see interest rates in the future
3️⃣ Global liquidity
Crypto rises with liquidity
Falls when money gets expensive
🔗 Golden rule for crypto
📌 Crypto does not fall because the Fed kept
📌 Crypto falls if the Fed frustrates expectations
🧠 Summary to remember
✔️ Expected maintenance → small or neutral impact
❌ Unexpected maintenance + tough speech → crypto falls
✅ Maintenance + signal of future cuts → crypto can rise