On June 18, 2025, the Federal Reserve decided to keep its benchmark interest rate unchanged, maintaining the federal funds rate target range at 4.25%–4.5%. This indicates that the Fed is not ready for a clear shift towards easing monetary policy, which may have significant effects on both traditional financial markets and the cryptocurrency sector.
High Interest Rates: Capital Remains Hesitant
By maintaining the current interest rate range, the Fed signals to traditional investors that returns haven't peaked yet and dollar-denominated assets remain strong. This means significant amounts of capital are likely to stay in safer instruments like U.S. Treasuries and money market funds, negatively impacting the crypto market:
* Institutional clients will hesitate to enter the volatile token market; * On-chain activity remains muted, with DEX volumes continuing to shrink; * Fundraising costs remain high, making it difficult for new tokens to secure liquidity; * Yield-bearing stablecoin products lose appeal amid elevated fiat returns.
Upward Revised Inflation Forecasts: Crypto as an Inflation Hedge
Although the Fed's Dot Plot still projects two rate cuts this year, Chair Jerome Powell's comment that "summer inflation could rise" has triggered renewed market concern. Core PCE is now projected at 3.0%, far above earlier estimates of 2.1%. In this environment, investors are once again asking the question: *Can the dollar still be trusted?*
In this context, gold is gaining momentum, and crypto assets, particularly Bitcoin, are regaining their status as "digital gold." Historically, whenever inflation surges and fiat currencies face devaluation risks, capital seeks out alternative hedges:
* Bitcoin reached an all-time high during the inflation spike in 2021; * Deflationary tokens like BTC, LTC, and BNB gained significant attention; * Demand for RWA-backed stable assets (e.g., gold or Treasury-pegged tokens) is rising.
Policy Uncertainty: A Catalyst for Speculative Moves in Crypto
According to the Dot Plot, the number of officials expecting two cuts this year has dropped from 11 to 10, while those expecting *no cuts* rose from 4 to 7. Although the median forecast remains unchanged, internal divergence is becoming increasingly evident — and *uncertainty* is precisely the environment where crypto speculation thrives.
In traditional markets, policy ambiguity typically suppresses risk appetite. In crypto, however, ambiguity and volatility *create* new opportunities:
* Swing traders can leverage shifting expectations around rate cuts/hikes; * Market makers and arbitrage bots can earn more from volatile liquidity environments.
The Fed's pause may seem to "maintain the status quo" — but it actually hints at something *waiting to erupt*. For crypto markets, this is a period of both risk and opportunity. Rising inflation expectations and policy division create new space for *hedge-grade crypto assets*. Your ability to accurately anticipate *the turning point in medium-term expectations* will ultimately decide *which side of the next bull/bear cycle you find yourself on*.
