Fed Rate Cut Bitcoin Drops by 5% As Federal Reserve Leaves Rates the Same

Bitcoin Where to Buy fell below $71,000 after the Federal Reserve kept its benchmark rate at 3.5% to3.75% on Wednesday, causing renewed pressure in risk assets. Digital asset fell more than 5% in one day, as traders responded to the Federal Reserve’s policy that maintained borrowing costs at a high level and did not support expectations for a faster rate of easing.

At the conclusion of its meeting in March, the Federal Open Market Committee decided to keep rates unchanged by a vote of 11-1. Stephen Miran, the Federal Reserve governor who dissented from a rate cut of 25 basis points and supported it instead, was not part of the committee. The broader group remained concerned about inflation which continues to be above target as well as a slowing labor market. The Fed stated that uncertainty about the economy remained high and pointed to the Middle East developments as one factor clouding its outlook.

Bitcoins’ decline was due to investors adjusting to a path of policy that is still pointing to limited rate reductions. Seven policymakers predicted no rate cuts for 2026, but the central bank kept its projections of a quarter-point cut in 2026. The federal funds rate median projection at the end of the year 2026 was 3.4%. However, the long-term rate estimate has been revised down to 3.1%.

Fed keeps policy tight as inflation remains above target

After the Fed announcement, market participants focused on Jerome Powell’s comments. Powell stated that the committee was trying to find a balance between the downside risks of the labor market and the upside risks of inflation. This is especially true as the oil prices are rising during the war with Iran. According to details given during coverage of the event, Brent crude is now at about $108 per barrel and U.S. gas prices are $3.80 a gallon.

Powell addressed the question of how long inflationary pressures would last. He said that we should be modest about how long tariffs will take to reach the entire economy. Previous inflation shocks also lasted much longer than anticipated. Powell stated that the U.S. has been doing well despite a number of challenges in the last few years.

Central bank’s position kept pressure on the markets, which are highly sensitive to conditions of liquidity. Bitcoin often benefits from low rates and easier conditions in the financial markets, but this latest Fed advice reinforced an environment where interest rates will remain higher for longer. This backdrop is supportive of yields for cash and government bonds, which limits the near-term appeal of non-yielding investments such as Bitcoin.

Jerome Powell Answers Questions on Leadership

Powell was also asked by reporters about his plans as chairman, since his current term is set to expire on May 15th. Powell stated that he will remain as chair if no successor has been confirmed by the deadline. According to his remarks at the press conference, Powell said that he had no plans to step down before the investigation was concluded.

When he was asked about his leadership, he told reporters “I won’t have anything more to add on that subject, by the way.”

Kevin Warsh was named by President Donald Trump as the nominee to replace Powell. Trump has called repeatedly for lower rates of interest and encouraged the Fed to act more aggressively. Powell rejects the Justice Department’s criminal probe into renovation costs overruns in the Fed headquarters.

Bitcoin Reacts To “Higher For Longer” Outlook

Bitcoin’s decline reflects the response of the market to an ambiguous policy that is still pointing to tight financial conditions. Barron’s reports that Bitcoin dropped 3.9%, to $71,678, after the Fed’s decision. Ethereum and XRP were also down.

This pullback was a result of BTC’s recent attempts to stabilise above the resistance level in the area between $74,500 and $76,600.

Source: X

The current movement leaves traders wondering if Bitcoin will be able to defend its higher-low pattern built over the $65k zone. If the market moves back towards resistance, the area between $76,000 and $80,000 will remain in sight. Failure to maintain support could weaken the recovery. Crypto analyst Michael Van de Poppe believes that this BTC Today’s Viral level= MediumSlateBlue is an immediate risk-off trend tied to oil and the Fed.