Fed Hawkishness Slams Crypto Markets

The Federal Reserve's decision to keep interest rates unchanged at 3.50%-3.75% has sent shockwaves through cryptocurrency markets, with Bitcoin and Ethereum experiencing significant losses.

Although the Fed's policy statement matched market expectations, a split vote among policymakers highlighted continued concern over inflation remaining above target. Three officials - Beth Hammack, Neel Kashkari, and Lorie Logan - dissented in favor of a 25-basis-point increase, underscoring their worries about inflation.

The central bank's statement emphasized that the U.S. economy is expanding at a solid pace, but pointed to energy-related supply shocks as a factor keeping inflation elevated. The Fed's commitment to restoring price stability was reiterated, with policymakers prepared to act if inflation proves more persistent than expected.

Cryptocurrency markets reacted negatively to the hawkish message, with Bitcoin falling toward $63,300 and Ethereum dropping below $1,900. Total market capitalization fell to approximately $2.17 trillion, while the Fear & Greed Index slipped to 34, indicating that investor sentiment has shifted further into fear.