On January 29, as the Federal Reserve officially announced it would keep interest rates unchanged, expectations for policy easing in early 2026 have completely evaporated. EasyMarkets believes this meeting was not just a continuation of monetary policy but also a significant inflection point for market sentiment. Previously, in mid-November, predictions in the market had placed the probability of a January rate cut at over 40%. However, due to inflation showing greater-than-expected resilience, this probability had plummeted to near 0% just before this policy meeting. Under such macro pressure, the liquidity premium in the cryptocurrency market has been suppressed, directly leading to stagnant price performance for risk assets like Bitcoin.
Judging from the market's reaction, Bitcoin remained trapped below $89,500 following the interest rate decision, failing to capitalize on any momentum for a breakout. Concurrently, the U.S. dollar index staged a strong rebound after a prior adjustment, while spot gold performed exceptionally well, rising 3.7% in a single day and approaching the historic high of $5,300 per ounce. This pattern of "strong gold, weak crypto" indicates that capital is favoring traditional safe-haven assets amidst the fog of policy uncertainty. EasyMarkets notes that the two dissenting votes within the Fed—Stephen Miran and Chris Waller, who both supported a 25-basis-point cut—reveal subtle divisions within the decision-making layer. These divisions could potentially become a trigger for significant volatility in both the forex and cryptocurrency markets in the future.
Regarding the future interest rate path, market expectations for a rate cut in March have dwindled to only about 16%. Even by April, the probability of a cut has only recovered to around 30%. This "higher for longer" interest rate environment undoubtedly poses a heavy burden for digital assets, which lack interest income. EasyMarkets suggests that if Chairman Powell maintains a cautious stance in subsequent communications and hints that the total number of rate cuts for 2026 may be fewer than previously projected, risk assets will face sustained repricing pressure.
Overall, investors are currently in a vacuum period characterized by a tug-of-war between tightening liquidity and economic stability. Although the January policy decision temporarily closed the door on a rapid dovish pivot, the market's faint expectations for modest easing in the second quarter still offer a glimmer of hope. EasyMarkets emphasizes that, at this stage, the $89,500 level has become a highly symbolic resistance point for Bitcoin in the short term. Traders need to closely monitor the marginal impact of the dollar's rebound on Bitcoin's liquidity. Facing a complex and volatile macro environment, EasyMarkets advises investors to maintain flexible asset allocation to navigate potentially extreme volatility.
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