BTC’s advance faces a key challenge as the Fed decision looms Wednesday.

Crypto markets turned cautious on Tuesday as traders stepped to the sidelines ahead of the Federal Reserve’s policy decision, with focus shifting from the rate call itself to the central bank’s messaging.

Bitcoin (BTC) briefly pushed above $76,000 during overnight trading before retreating to around $74,000 in the U.S. session, still holding modest gains over the past 24 hours.

Crypto-related equities also edged higher. Circle gained roughly 5%, while Bitdeer surged 12%. Meanwhile, the Nasdaq Composite rose 0.5% and the S&P 500 added 0.25%.

The Federal Reserve is widely expected to leave benchmark interest rates unchanged in the 3.50%–3.75% range. Instead, markets are focused on signals from Chair Jerome Powell and policymakers’ outlook for the path of rates.

A key uncertainty is the recent surge in oil prices, fueled in part by the ongoing conflict involving Iran, and its potential impact on inflation expectations.

Bitfinex analysts say the central question is whether policymakers will continue to point toward rate cuts in 2026 or begin shifting toward a more restrictive stance. A hawkish tilt could weigh on risk assets, including crypto, by boosting the dollar.

Powell’s interpretation of rising oil prices will be particularly important. If viewed as a temporary supply shock, markets may take it in stride. But a more persistent, stagflationary framing could limit the Fed’s ability to ease policy and pressure asset prices.

According to Bitfinex, the most negative scenario for markets would be a combination of stronger-than-expected PPI inflation data followed by hawkish commentary from Powell — a mix that could undermine the recent crypto rally.

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