Bitcoin, Ethereum Dip as Fed Holds Rates Steady for Third Straight Time

The Federal Reserve continued to hold its benchmark interest rate steady on Wednesday, maintaining a cautious stance following the conclusion of what is widely expected to be Jerome Powell’s final FOMC meeting as chair.

The Federal Open Market Committee kept the central bank’s benchmark rate pinned at a target range of 3.5% to 3.75%, marking the third time this year that the group has hit the brakes on policy shifts as conflict in the Middle East threatens the global economy.

“Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook,” the Fed said in a statement.

The Fed’s decision on Wednesday was anticipated. Meanwhile, Bitcoin and Ethereum changed hands around $75,100 and $2,240, with both dipping following the announcement to accelerate losses over the past day, according to CoinGecko. Bitcoin is now down 1.4% in the last 24 hours, while Ethereum has fallen 2.3%.

During a post-decision press conference, Powell said he had decided to remain a voting member of the FOMC and transition into a governor role for a period that is “to be determined.”

Powell said the decision was motivated by a “series of legal attacks on the Fed which threaten our ability to conduct monetary policy without considering political factors,” which have been spearheaded in recent months by the Trump administration. 

Powell had indicated that he would serve as “chair pro tempore” if Warsh isn’t confirmed by May 15, aiming to maintain an orderly transition for the leadership position. Throughout his second term, President Donald Trump has pressured Powell to lower interest rates.

Earlier in the day, the Senate Banking Committee advanced Kevin Warsh’s nomination to succeed Powell, whose eight-year tenure at the Fed’s helm expires next month. The procedural vote sent Warsh’s nomination to the full Senate, where Republicans hold a majority.

Last week, the Justice Department ended its criminal investigation into Powell. Sen. Thom Tillis (R-NC) had vowed to block any vote on Warsh’s nomination until investigators closed the case, which Tillis had described as “bogus.”

Recent disclosures showed that Warsh, with a net worth of $100 million, holds many investments tied to the crypto sector, such as Solana and Polymarket. Although he has described many crypto projects as fraudulent and worthless, he has voiced support for Bitcoin.

During the FOMC’s latest meeting, Fed Governor Stephen Miran called for a 25 basis-point rate cut. The Fed’s previous interest-rate decision was also split, with Miran advocating for a cut. Three Fed governors supported the decision to stand pat, but they did not endorse the inclusion of language that pointed to an easing bias.

Lower interest rates tend to benefit risk assets like stocks and crypto due to cheaper borrowing and increased liquidity. However, traders don’t foresee looser monetary conditions emerging anytime soon, with rates expected to remain steady through December, per CME FedWatch.

“In the near term, the ‘higher for longer’ message is a headwind for Bitcoin,” Iggy Ioppe, CIO at trading infrastructure platform Theo, told Decrypt. “Bitcoin moved about 1.2% lower on the print, reflecting the market’s view that tighter liquidity conditions remain bearish for the asset in the short run.”

With ships continuing to struggle to transit the Strait of Hormuz, through which 20% of the world’s oil flows, U.S. energy costs have climbed higher, potentially complicating the Fed’s efforts to deliver inflation back to its 2% target.

On Wednesday, the national average price for a gallon of gas clocked in at $4.22, a 6.2% increase over the past month, according to AAA. Around the time that the U.S.-Israel war with Iran broke out, the average mark hovered around $2.99 per gallon.

Editor’s note: This story was updated after publication include detail from Powell’s remarks and another comment.