Santiment contributor Brian has analyzed the impact of US interest rate hikes on the cryptocurrency market, noting traders’ sensitivity to Federal Open Market Committee (FOMC) meetings.
He highlighted that the Federal Reserve’s aggressive tightening cycle in 2022, raising rates from 0.25% in March to 4.50% by December in response to peak inflation of 9.1%, significantly affected crypto prices. This period marked one of the fastest tightening cycles in history.
The most recent FOMC meeting, held on March 18-19, 2025, maintained the federal funds rate at 4.25%–4.50%, with the inflation forecast slightly adjusted to 2.7% for the year. Unlike previous meetings that triggered significant price movements, the crypto market’s reaction to this decision was relatively muted. However, the persistent link between monetary policy and market sentiment remained evident.
Over the past year, the Federal Reserve held nine meetings that impacted crypto prices. The September 2024 meeting resulted in a 25-basis point cut to 5.00%–5.25%, leading to a bullish trend until January 2025. In November 2024, another rate cut to 4.75%–5.00% coincided with the election of pro-crypto candidate Donald Trump, which fueled a rally that drove Bitcoin to new all-time highs.
Brian noted that the correlation between traditional financial markets and cryptocurrencies remains strong, with rate decisions continuing to drive volatility. As the Fed navigates inflation control, traders and investors are urged to stay cautious and remain informed on evolving monetary policy developments.
Despite these bullish phases, the crypto market is experiencing a prolonged downturn, with Bitcoin in its seventh consecutive week of decline, currently trading at around 78,000 naira. A report by Santiment attributes this downturn to profit-taking by major stakeholders on February 19, which caused a sharp price drop. Between February 20 and March 8, about 22,702 BTC was transferred from private wallets to exchanges, indicating potential selling pressure and increased volatility amid ongoing investor uncertainty related to interest rate decisions.
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