Crypto Market Awaits Fed Decision as Bitcoin Holds Steady, Altcoins Struggle

Analysts from QCP Capital suggest that while a rate cut is unlikely, any dovish rhetoric from the Federal Reserve could fuel a fresh wave of buying in bitcoin, potentially dragging altcoins higher in the process.

On Tuesday, the crypto market saw mixed movement, with major altcoins struggling while bitcoin remained relatively stable. Dogecoin (DOGE) and XRP led losses among top tokens, each dropping over 3% in the past 24 hours. The CoinDesk 20 Index (CD20), a benchmark for the broader crypto market, slipped 2%.

The cautious trading behavior comes as investors brace for Wednesday’s Federal Open Market Committee (FOMC) meeting, which is expected to have a significant impact on monetary policy and risk assets like cryptocurrencies.

The Federal Reserve is widely expected to keep interest rates at 4.25%–4.50%, but the market’s focus will be on comments from Fed Chair Jerome Powell. A hawkish stance, indicating prolonged high rates, could put downward pressure on bitcoin, while a dovish shift could provide a much-needed boost to the market.

“A rate cut at this stage remains highly unlikely as the U.S. transitions away from fiscal dominance—where economic growth was fueled by government spending—to [President Donald] Trump’s emphasis on deficit reduction,” traders from QCP Capital said in a market update. “This means monetary policy carries even greater weight. While we don’t anticipate a surprise cut, any dovish tilt from Powell could be the spark that reignites bullish momentum.”

They also pointed to a potential shift in capital allocation, with funds rotating away from Trump-driven trades in NASDAQ and bitcoin toward undervalued European and Chinese markets. Historically, cryptocurrency markets have been slow to react to global liquidity trends, QCP Capital added.

Agne Linge of WeFi highlighted that broader market sentiment remains fragile, with the crypto fear and greed index currently at 22, indicating “extreme fear” as investors navigate concerns over inflation, geopolitical tensions, and trade policy shifts.

“In the U.S., the S&P 500 and Nasdaq Composite extended their losing streak to four consecutive weeks, with the Dow Jones suffering a 3.1% decline—its worst weekly performance in nearly two years. While last week’s sell-off was notable, uncertainty continues to weigh on market sentiment,” Linge noted, suggesting that macroeconomic headwinds could drag bitcoin lower.

Ryan Lee, chief analyst at Bitget Research, noted that bitcoin remains trapped in a narrow trading range, with its next move likely dictated by the Fed’s policy stance.

“Bitcoin has been consolidating post-rally, and traders are closely watching key support levels between $82,000 and $85,000,” Lee told CoinDesk in an email. “If sentiment turns bearish, we could see bitcoin revisit the $75,000–$80,000 range. However, if the Fed leans dovish, prices could surge toward $90,000.”