Fed Holds Rates Amid Inflation, Crypto Markets React

The U.S. Federal Reserve maintained its benchmark interest rate at 4.25%-4.50%, signaling a cautious approach amid persistent inflation, with fewer rate cuts expected in 2025 and 2026 and revised higher inflation forecasts. This hawkish stance led to a delayed but sharp downturn in the cryptocurrency market, with Bitcoin and major altcoins experiencing significant price drops, contrasting with modest gains in U.S. equities. However, the crypto market was reinvigorated by a historic single-day net inflow of $3.1 billion into U.S.-based spot Bitcoin ETFs, marking the largest institutional accumulation of Bitcoin to date and indicating a surge in institutional conviction. This substantial demand caused a supply shock and likely triggered a price surge and short squeeze, with increased trading volumes and open interest on major exchanges. Despite the Federal Reserve's cautious outlook and the resulting market volatility, Bitcoin's price showed relative stability immediately after the announcement, reflecting its evolving role as a risk asset. Meanwhile, altcoins displayed significant volatility, offering potential trading opportunities amid the shifting macroeconomic landscape.