The Federal Reserve (Fed) is set to hold interest rates unchanged at its first meeting of 2025, with markets bracing for any signals on future monetary policy. While the decision to maintain the current target range of 4.25%-4.5% has been widely anticipated, Fed Chair Jerome Powell’s commentary on key economic issues could still influence cryptocurrencies and broader risk assets like Bitcoin (BTC).
Rate Pause But Hawkish Guidance Remains
The Fed’s decision to pause follows a 100-basis-point reduction in rates since September 2024. December’s 25-basis-point cut came alongside hawkish forward guidance, dampening risk assets as policymakers projected a slower pace of easing this year. Wednesday’s meeting, widely expected to be a “non-event,” may reinforce this stance.
“We doubt this week’s FOMC meeting will be a major market mover,” noted Danske Bank, highlighting that the Fed has already accounted for uncertainties surrounding economic policies.
Deportations and Labour Market Dynamics
One focal point is President Donald Trump’s push to deport illegal immigrants, with estimates suggesting up to 10 million deportations. Analysts predict this policy could tighten the labour market, adding inflationary pressures.

“The removal of up to 1 million workers would tighten the U.S. labour force significantly,” stated Rabobank’s Benjamin Picton, emphasising the potential for higher inflation. Powell’s views on this could sway expectations for future rate cuts, impacting crypto prices and other risk assets.
Debt Ceiling Liquidity Boost
The U.S. Treasury hit its $36 trillion debt ceiling last week, prompting extraordinary measures to keep the government running. Among them, spending from the Treasury General Account (TGA) is expected to inject liquidity into the economy, potentially countering the Fed’s quantitative tightening efforts.
Powell may address the delicate balance of liquidity conditions without appearing overly dovish, which could temper any positive reaction in risk-sensitive assets like Bitcoin.
Rent Inflation: A Glimpse of Disinflation?
Encouraging signs of slowing rent inflation may provide a silver lining. Leading indicators suggest shelter inflation, a significant driver of the consumer price index, is moderating.
“If confirmed, the cooling in rent inflation could support disinflation narratives,” noted Wall Street Journal’s Nick Timaros. Powell’s acknowledgment of these trends could spur optimism in crypto markets, given their sensitivity to inflation data.
What’s Next for Crypto?
With rates expected to remain unchanged, the crypto market may initially see little movement. However, Powell’s comments on inflation, labour dynamics, and liquidity could drive volatility. Hawkish undertones might pressure Bitcoin and other digital assets, while any dovish hints could fuel optimism.
Investors should remain cautious, focusing on Powell’s take on broader economic trends. The interplay of monetary policy, labour markets, and inflation will continue to shape crypto’s trajectory in 2025.