As the Federal Open Market Committee (FOMC) concluded its January 28, 2026 meeting, the Fed decided to hold interest rates steady at 3.50% – 3.75%, pausing after three rate cuts in late 2025. This move reflects caution as the Fed evaluates inflation trends, labor market strength, and the potential ripple effects of global geopolitical tensions.
Ahead of the announcement, Bitcoin hovered near $89,000, with traders bracing for volatility. Historically, Bitcoin often experiences pullbacks around FOMC meetings, even when rates are unchanged, making this pause a potentially moment for crypto sentiment.
Fed Chair Jerome Powell’s post-meeting remarks emphasized patience, noting that future adjustments will depend on economic data, not speculation. Analysts suggest this steadiness could temporarily boost institutional confidence, as ETFs and corporate treasury allocations may continue to favor crypto over short-term fiat positioning.
Volatility Signals and Crypto Positioning
Data indicates mixed signals in buyer-seller balance and institutional flows ahead of the Fed’s announcement. On-chain activity suggests tight trading ranges, with support near $84,000 and breakout levels around $90,000. Crypto traders are watching these levels closely for early signs of market direction.
Interestingly, the Fed pause might encourage investors to reassess risk appetite, potentially leading to a “buy-the-dip” sentiment for Bitcoin and Ethereum if macro conditions remain stable.
Prediction Markets Had Near-Total Consensus
Ahead of the decision, expectations were unusually lopsided across both crypto-native and traditional financial markets.
On Polymarket, traders assigned more than 99% odds that the Federal Reserve would keep rates unchanged at its January meeting. Less than 1% probability was placed on alternative outcomes, including a 25-basis-point or 50-basis-point cut, or a surprise rate increase.
Traditional market tools showed similar conviction. The CME FedWatch Tool indicated a 97% chance that rates would remain within the current range, reinforcing a rare alignment between decentralized prediction markets and institutional interest-rate pricing models.
That near-unanimous forecasting meant the decision itself generated little immediate volatility across risk assets.
Crypto prices barely reacted to the decision. The top 10 largest digital assets saw their prices react differently after news broke of the Fed’s choice. Despite the mixed reactions, the crypto majors were still in the green on the 24-hour time frame at the time of writing, data from CoinCodex shows.
Geopolitical Crosswinds Adding to Macro Uncertainty
Markets are navigating not just monetary policy but also rising geopolitical risks, which could influence crypto volatility.
Greenland as a Strategic Flashpoint
Tensions over Greenland remain a focal point. U.S. negotiations for expanded Arctic influence have strained relations with Denmark and EU allies, prompting high-level diplomatic discussions on security and sovereignty.
U.S. Naval Presence Near Iran
Amid heightened tensions, the USS Abraham Lincoln strike group and allied assets are deployed near Iran as a deterrent. Tehran has warned of strong retaliation if attacked, keeping risk sentiment elevated for global markets.
Russia-Ukraine Talks in Dubai
Recent high-level talks in Abu Dhabi involving U.S., Russian, and Ukrainian officials reflect ongoing diplomatic efforts. While progress is slow, these discussions contribute to the complex global backdrop shaping investor psychology.
Conclusion and Historical Context
The Fed’s decision to pause interest rate adjustments at 3.50%-3.75% marks a continuation of cautious policy after three cuts in late 2025. Historically, Bitcoin has reacted strongly around FOMC meetings, even when rates remain unchanged.
Past cycles show that Fed pauses can serve as both a stability anchor and a trigger for volatility, depending on broader macro and geopolitical factors. For example, in 2022, Bitcoin experienced sharp pullbacks following FOMC announcements due to uncertainty over interest rate trajectories, even without an immediate rate hike.
Source: https://coinpaper.com/14113/fed-meeting-rates-hold-steady-while-6-b-leaves-bitcoin-et-fs
