Bitcoin Holds Steady as Fed Signals Slower Growth and Persistent Inflation

Bitcoin’s price hovered just above $104,000 on Wednesday as markets absorbed signals from the Federal Reserve pointing to stickier inflation and a cooling economy.

As widely anticipated, the Fed held its benchmark interest rate steady at 4.25%-4.50% following its June policy meeting.

“While fluctuations in net exports have influenced recent data, broader indicators suggest the economy continues to expand at a solid pace,” the central bank said in its post-meeting statement. “The unemployment rate remains low, and labor market conditions are solid. However, inflation remains somewhat elevated.”

In its latest quarterly projections — including the so-called “dot plot” that charts expectations for future interest rates — the Fed indicated it still anticipates the federal funds rate falling to 3.9% by the end of 2025. That implies about 50 basis points of rate cuts this year, consistent with its March forecast. However, policymakers foresee rates drifting only modestly lower in the years ahead, targeting 3.6% in 2026 and 3.4% in 2027, suggesting a slower pace of cuts than previously projected.

The Fed also downgraded its economic outlook. It now expects U.S. GDP to grow by just 1.4% this year, down from 1.7% in March. Inflation estimates were revised higher, with PCE and core PCE inflation projected at 3% and 3.1% respectively for 2025, up from prior forecasts of 2.7% and 2.8%. Meanwhile, the unemployment rate is projected to rise to 4.5% both this year and into 2026, compared to earlier projections of 4.4% and 4.3%.

Bitcoin (BTC), which was trading around $104,000 earlier in the day, was little changed following the Fed’s announcement, sitting near $104,200. Equities reacted positively, with the S&P 500 and Nasdaq both moving higher.

“The Fed’s dot plot reveals a clear trend toward stagflationary pressures—a scenario where growth slows even as inflation and unemployment stay stubbornly high,” said David Hernandez, crypto investment specialist at digital asset manager 21Shares.

Historically, such conditions have weighed on traditional assets and fiat currencies, Hernandez noted. However, bitcoin’s limited supply, decentralized nature, and independence from U.S. economic performance could make it an attractive alternative.

“In a stagflationary environment, capital inevitably seeks assets that preserve value and offer growth potential, and that search increasingly leads investors to bitcoin,” Hernandez added.