Bitcoin’s rally meets a critical test ahead of Wednesday’s Fed meeting.

Bitcoin (BTC) briefly climbed above $76,000 overnight before easing back to around $74,000 during the U.S. session, still slightly higher over the past 24 hours.

Crypto-linked equities posted modest gains. Circle rose about 5%, while Bitdeer jumped 12%. In traditional markets, the Nasdaq Composite ended the day up 0.5%, and the S&P 500 added 0.25%.

Markets broadly expect the Federal Reserve to keep benchmark interest rates unchanged in the 3.50%–3.75% range. Instead, the spotlight is on commentary from Chair Jerome Powell and policymakers’ outlook for future rate moves.

Rising oil prices — driven in part by the ongoing conflict in Iran — have complicated the inflation picture, increasing uncertainty around the Fed’s next steps.

According to Bitfinex analysts, the key issue is whether policymakers continue to signal rate cuts in 2026 or begin shifting toward a “higher for longer” stance. A more hawkish tone could pressure risk assets, including crypto, by strengthening the U.S. dollar.

Powell’s assessment of the recent oil surge will also be closely watched. If framed as a temporary shock, it could support market sentiment. However, if the Fed adopts a more stagflationary outlook, it may reduce flexibility for future easing — a scenario that could weigh on both traditional and digital assets.

Bitfinex analysts added that the most bearish combination for markets would be hotter-than-expected PPI inflation data in the morning followed by hawkish remarks from Powell later in the day — a mix that could challenge the recent crypto rally.