Bitcoin treads water as the Fed holds policy steady and rate-cut bets evaporate.

The Federal Reserve’s January rate decision capped a sharp reversal in easing expectations, a shift that has weighed on crypto markets in recent weeks.

The central bank held its benchmark interest rate steady on Wednesday, closing the door on market pricing that had previously pointed to an early 2026 rate cut.

“Job gains have remained low, and the unemployment rate has shown signs of stabilizing,” the Fed said in its policy statement. “Inflation remains somewhat elevated.”

The decision drew two dissents. Stephen Miran, a recent Trump appointee, and Chris Waller—both viewed as potential successors to Fed Chair Jerome Powell—favored a 25-basis-point rate cut.

Markets showed little reaction to the expected outcome. Bitcoin traded just below $89,500, U.S. equities were largely unchanged, and the U.S. dollar strengthened sharply after the previous day’s decline. Gold extended its rally, rising 3.7% to trade near record highs around $5,300 per ounce.

The shift in expectations has been swift. Just two months ago, prediction markets placed the odds of a January rate cut above 40%. Those expectations faded through late November, and by the time of this week’s meeting, markets were pricing a rate hold with nearly 99% certainty, reinforcing the view that policy will remain restrictive through the first quarter.

While the January decision effectively ruled out near-term cuts, expectations for easing later in the year remain intact. CME FedWatch data show just a 16% chance of a rate cut in March, with the probability rising to about 30% by April.

“The Fed’s decision reflects persistent inflation pressures alongside a stabilizing economy,” said Nick Ruck, director of LVRG Research, in a Telegram message. “That backdrop could lead to continued near-term volatility in crypto markets.”

Ruck added that if Chair Powell strikes a “higher-for-longer” tone or signals fewer rate cuts in 2026, risk assets—including bitcoin—could face additional short-term pressure.