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Fed said it will not be cutting rates in the near future as long as inflation and oil risk remain high.
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Bitcoin fell below $71K after the FOMC as liquidity expectations faded.
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On-chain Data Holds Stable with MVRV 1.3 and SOPR 0.999, as well as continued exchange outflows
Bitcoin’s price fell below $71,000 today after the Federal Reserve indicated it was not prepared to cut interest rates. This weakened expectations of near-term support for liquidity. The FOMC’s latest decision held rates at 3.5%-3.75%. This reduced the hopes of new money entering the market, and pushed cryptocurrency prices lower.
Fed Signals No Rate Reduces Amid Inflation Threats
The Federal Reserve maintained interest rates between 3.5% and 3.75%, but its forward guidance was the most important thing to take away.
The decision was unanimously supported by the committee with 10 of 11 members voting in favor of keeping rates unchanged. Stephen Miran was the only member to vote against the decision. He supported a rate cut of 25 basis points.
Oil prices are likely to remain a major issue, as they have risen above $109 amid geopolitical turmoil. Fed Chair Jerome Powell stated that rising energy costs are affecting inflation projections and limiting the scope of rate cuts.
The Fed also raised its inflation forecast for 2026 to 2.7%. The Fed also shifted the rate path to fewer cuts even though increases are not the baseline.
In a recent statement, Fed chair Jerome Powell said that if the inflation rate does not improve then rates will remain at their current levels.
Bitcoin Reacts As Liquidity Expectations Fade
Bitcoin’s price, which was already trading at around $75K before the Fed’s announcement, plummeted sharply as soon as it became clear what their stance was.
The decline was not an isolated event, as equities closed lower. The S&P 500, Nasdaq and crypto-related stocks all saw losses.
Liquidity remains the primary driver. Financial conditions are unlikely in the near future to ease, as there is no sign of rate cuts. This will reduce risk appetite on all markets.
On-Chain data signals market stability
CryptoQuant’s on-chain data indicates that the market remains stable despite recent price drops. The MVRV is around 1.3 which has helped to prevent larger declines in the recent past. The SOPR is near 1, which shows that traders are not making large profits or losses, and keeping the market in balance.
Gleichzeitig, Bitcoin is being removed from exchanges in greater numbers, reducing the selling pressure. ETF holdings have also increased, indicating that institutions are buying steadily.
Negative funding rates indicate that traders are being cautious and not over-leveraged. Overall, analysts think the market is not overheated. It is currently in an “awaiting phase”.
Bitcoin is currently caught between two forces. On the one hand, macro conditions remain tight, with no rate cut, rising oil prices and geopolitical risks keeping volatility high.
Demand, on the other hand, remains unchanged. The supply on exchanges continues to decline, while large holders continue their accumulation and ETF flows stabilize after recent volatility.
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