Fed meeting results reveal interest rate hike expectations, crypto market's interest rate cut dream shattered

The “interest rate cut” expectations once held high hopes in the cryptocurrency market are now facing significant challenges. The latest Fed meeting results and financial institutions’ policy forecasts present a starkly different picture — JPMorgan recently stated that the Federal Reserve will keep rates unchanged until Q3 2025 and is more likely to face rate hikes rather than cuts in the future, forming a strong contrast to the long-term expectations of a loose policy environment from the crypto community.

Divergence in Federal Reserve Policy Forecasts: Institutional Predictions Vary Greatly

According to Reuters, JPMorgan predicts that the Fed will keep interest rates in the 3.5% to 3.75% range until Q3 2027, with a possible 25 basis point hike in Q3 2027. However, the same Fed meeting results are interpreted very differently by the market.

CME Group’s FedWatch tool shows that traders are heavily betting on at least two rate cuts this year, each by 25 basis points. This huge disparity in expectations reflects deep market disagreement over the Federal Reserve’s policy direction. Many crypto analysts follow this optimistic outlook, believing that lower borrowing costs will rekindle investors’ risk appetite, thereby boosting Bitcoin and other risk assets. FXTM senior market analyst Lukman Otunuga once said, “Although 2025 will be challenging, with shrinking supply and rate cut expectations, Bitcoin could see a strong rebound in 2026.”

Crypto Bullish Sentiment Faces Setbacks: When Will Rate Cuts Materialize?

The bullish camp in the crypto space has long pinned its hopes on the next Federal Reserve chair. Current Chair Jerome Powell’s term will end this May, and the market generally expects the successor to adopt a more dovish policy stance. However, the current Fed meeting forecast suggests that policy shifts may be farther away than market expectations.

JPMorgan’s rate hike forecast aligns with the technical patterns observed in the current 10-year U.S. Treasury yield. This pattern indicates that the 10-year yield, which serves as a global asset pricing benchmark, could challenge the 6% high within the next year (currently around 4.18%). If this scenario materializes, high-valuation assets and risk investments like cryptocurrencies will likely face considerable downside pressure.

Strong Fundamentals: Rate Cuts Remain a Distant Hope

However, JPMorgan analysts also emphasize that if the labor market shows clear signs of weakness or inflation rates decline significantly, the Fed could pivot later this year. Yet, recent employment data shows the U.S. unemployment rate unexpectedly falling to 4.4%, demonstrating the labor market’s high resilience.

It is this robust fundamental performance that has led investment banks like Goldman Sachs and Barclays to revise their previous forecasts, delaying expected rate cuts from March and June to September and December. These successive forecast adjustments further highlight the signals from the Fed meeting — the arrival of a looser policy may be much later than market expectations.

The “interest rate cut” bullish dream in the crypto market, in the face of more solid economic data, seems to require a longer-term wait.