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The Federal Reserve is expected to hold interest rates steady in the US central bank’s first decision of the year this week. The decision has likely been pricedThe Federal Reserve is expected to hold interest rates steady in the US central bank’s first decision of the year this week. The decision has likely been priced

What Bitcoin traders are focused on as Fed rate decision looms

Author: Coinstats

Source: Coinstats

2026/01/28 05:54

News Brief

The Federal Reserve looks set to maintain current interest rates at this week's gathering, with FedWatch data showing a 97% probability. Bitcoin enthusiasts—who generally thrive in lower-rate conditions—have probably anticipated this already. What really matters now is what Chair Jerome Powell reveals afterward, as his remarks could signal where rates are headed next.There's an unusual political twist unfolding this time. Powell is defending himself against allegations that he misrepresented renovation expenses to Congress, charges he attributes to President Trump, who's been aggressively advocating for cheaper borrowing. The central bank is designed to function free from political meddling, preventing hasty choices that might undermine long-term economic health. Yet Trump has spent months publicly demanding Powell slash rates, even suggesting he might dismiss him. Recently, the Justice Department opened an inquiry into Powell's congressional testimony regarding those building upgrades. Powell suspects Trump is weaponizing the DOJ to manipulate monetary decisions.Some analysts believe Trump's interference campaign might influence Bitcoin's trajectory, much like Turkey's experience where similar pressure triggered runaway inflation. Bitcoin typically flourishes when borrowing costs drop, and digital asset markets usually surge when rate reductions appear imminent. Forecasters expect no changes through March either. Should Powell unexpectedly suggest easing ahead, Bitcoin could see substantial gains.Additionally, this week brings financial updates from Apple, Meta, Microsoft, and Tesla that may affect cryptocurrency. Impressive performance could lift speculative investments like Bitcoin, whereas disappointing figures might drive capital toward traditional safe havens. Credit spreads have narrowed since November, indicating growing appetite for risk—potentially favorable for the leading digital currency.

The Federal Reserve is expected to hold interest rates steady in the US central bank’s first decision of the year this week.

The decision has likely been priced in by Bitcoin traders, who usually want a low interest rate environment. The odds of the Fed keeping rates as they are was 97% on Tuesday, per the CME’s FedWatch tool.

Instead, all eyes will be on Chair Jerome Powell, whose comments after the two-day meeting could give traders a hint as to where interest rates may go next.

Politics is playing an unusual role this time around. The central bank chief is fighting allegations that he misled lawmakers about the cost of renovations to Federal Reserve buildings — allegations he pinned on President Donald Trump, who has long wanted interest rates slashed.

Why this time it’s different

The Federal Reserve is supposed to be free from political influence, which can lead to decisions that boost politicians in the short term while endangering long-term economic stability.

Since last year, however, Trump has tried to sway the central bank. He has publicly demanded that Powell lower interest rates and even threatened to fire the chair.

Earlier this month, the Justice Department opened an investigation into testimony Powell gave to a Senate committee about renovations to Federal Reserve buildings.

Powell has since alleged Donald Trump was using the Department of Justice to pressure the central bank and influence monetary policy.

Experts previously told DL News that increased pressure from the Trump Administration on the Fed could influence the price of Bitcoin, given the inflationary impact that a similar campaign had in Turkey.

Bitcoin has typically done well in a low interest rate environment; when the Fed Chair has signalled rates will drop, crypto markets have generally popped on the news.

But markets overwhelmingly believe the Fed will continue to hold rates steady at its March meeting as well, according to CME’s FedWatch tool. If Powell suggests the central bank is, in fact, strongly considering a rate cut, the surprise could redound to Bitcoin.

What Powell hints following the central bank’s two-day meeting will influence where the price of the leading cryptocurrency goes next.

Other things to watch this week

There are other things to keep an eye on this week, according to experts. Apple, Meta Platforms, Microsoft, and Tesla report earnings this week — which could have an impact on Bitcoin.

“Strong results could lift risk assets across the board, including Bitcoin, while disappointment would likely reinforce the current bid for established safe havens,” Matt Howells-Barby, VP at Kraken, told DL News.

He added that credit spreads have tightened since November, meaning investors are looking for more risk — a potential boon for the world’s largest cryptocurrency.

Mathew Di Salvo is a news correspondent with DL News. Got a tip? Email at mdisalvo@dlnews.com.

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