The crypto market is once again in a state of uncertainty, hanging on a single question: what will be the next decision of the U.S. Federal Reserve? While bitcoin hovers below $85,000 and the market’s fear and greed index collapses to 23, investors hold their breath. The Federal Open Market Committee (FOMC) meeting concludes today, and all attention is turned towards Jerome Powell.

Markets Under Pressure Before the Fed’s Verdict

For several days, bitcoin and major cryptos have experienced increased volatility, indicating growing nervousness.

This morning, bitcoin dropped below $83,000, before slightly rebounding to $83,450, while Ethereum, Solana, and XRP alternate between small gains and losses. Ryan Lee, chief analyst at Bitget Research, highlights this dynamic and specifies that:

Bitcoin has dropped by 0.2% to settle around $83,000, following a broader decline in the crypto market, while Solana, XRP, and Dogecoin are also experiencing a decline, as gold exceeds $3,000 an ounce and markets await the FOMC decision on March 19, 2025. Although bitcoin has historically been correlated with gold as a macroeconomic hedge, its current divergence (bitcoin dropping while gold rises) shows that it behaves more like a risk asset, influenced by uncertainty around Fed monetary policy, profit-taking, and a movement toward traditional safe havens. The outcome of the FOMC meeting could either favor a rebound if the tone is flexible or intensify the correction if the position remains restrictive, with the short-term of bitcoin now more linked to global economic signals than to its role as digital gold.

The central element that worries investors is the Federal Reserve’s position on interest rates. Officially, the consensus is for rates to remain between 4.25% and 4.5%, but it is Powell’s speech that will dictate the course of events.

Here are three possible scenarios that concern investors:

• Maintaining rates and cautious speech: the Fed may choose not to disturb the markets, maintaining a neutral tone and reminding that rates will remain high as long as necessary to counter inflation.
• A signal of monetary easing: if Powell suggests that a rate cut could occur sooner than expected, it would create a breath of fresh air for risk assets, including bitcoin.
• A stricter speech than expected: a firmer stance, reaffirming the absence of rate cuts before mid-2025, could trigger a capital flight from the crypto market, resulting in a significant price correction.

“We do not anticipate an immediate rate cut,” has already stated the Fed chairman in recent months. He highlights increased inflation and a still fragile economy.

However, a slight variation in his tone would be enough to trigger an immediate reaction in the markets.

For now, investors remain alert, scrutinizing every hint that could signal a shift in the Fed’s course.

A Crypto Market at a Crossroads

If the Fed maintains a firm and restrictive posture, the market could face another downturn, as investors would then favor safer investments like bonds.

Many analysts fear a tightening of liquidity, which would particularly impact risk assets like bitcoin.

“Financial flows are beginning to shift towards European and Asian markets,” observes a report from QCP Capital, suggesting a movement of capital away from tech stocks and cryptos.

Conversely, if Powell hints at a potential monetary easing sooner than expected, the crypto market could immediately react with a spectacular rebound.

The recent drop in the Consumer Price Index (CPI) from 3.1% to 2.8% could serve as an argument for an upcoming easing. If the Fed suggests that rate cuts will occur before mid-2025, bitcoin and altcoins could directly benefit, which would again attract investors seeking high returns.

Powell’s speech will condition market movements in the coming hours, and the magnitude of reactions could be severe. A conciliatory approach would pave the way for a new bullish dynamic and strengthen interest in cryptos as a safe haven in the face of a potential economic stimulus. Conversely, a hard and unambiguous line could mark the start of a new correction phase, which would test the markets’ resilience against inflexible monetary policy.