Fed stands pat on rates, early easing hopes fade, bitcoin remains muted.

The Federal Reserve’s January policy decision reinforced a dramatic shift in rate expectations, a backdrop that has weighed on crypto prices in recent weeks.

The central bank held interest rates unchanged on Wednesday, cementing a reversal from earlier market bets that had favored an early 2026 rate cut.

“Job gains have remained low, and the unemployment rate has shown some signs of stabilization,” the Fed said in its statement. “Inflation remains somewhat elevated.”

The decision was not unanimous. Two officials—Stephen Miran, a recent Trump appointee, and Chris Waller, who has been mentioned as a potential successor to Chair Jerome Powell—dissented, arguing for a 25 basis-point reduction in the federal funds rate.

Market reaction was muted. Bitcoin traded just below $89,500, U.S. equities were little changed, and the dollar rebounded sharply following a steep decline a day earlier. Gold extended its rally, climbing 3.7% to hover near record highs around $5,300 per ounce.

The outcome marked a sharp contrast from expectations earlier in the quarter. Just two months ago, prediction markets placed the odds of a January rate cut above 40%. Those expectations steadily faded through late November, and by the time of this week’s meeting, markets were pricing a hold with near certainty, reinforcing the view that policy will remain restrictive through at least the first quarter.

While the January decision effectively rules out near-term easing, it has not erased expectations for rate cuts later in the year. CME FedWatch data show only a 16% probability of a cut at the March meeting, rising to roughly 30% by April.

“The Fed’s decision reflects ongoing inflation pressures alongside a stabilizing economic environment,” said Nick Ruck, director of LVRG Research, in a Telegram message. “That mix is likely to keep near-term volatility elevated in crypto markets.”

Ruck added that a cautious, “higher-for-longer” message from Powell—or indications of fewer rate cuts in 2026—could place additional short-term pressure on risk assets, including bitcoin.