The crypto rally is took a pause on Tuesday ahead of Wednesday's Federal Reserve decision.

After briefly topping $76,000 overnight, bitcoin BTC$74,563.19 pulled back to around $74,000 during the U.S. session, modestly higher over the past 24 hours.

Crypto stocks mostly booked modest gains, with stablecoin issuer Circle (CRCL), bitcoin miner Bitdeer (BTDR) standing out advancing 5% and 12%, respectively. The Nasdaq closed with a 0.5% gain and the S&P 500 rose 0.25%.

It's almost universally expected that the Fed will leave benchmark interest rates unchanged at 3.50%-3.75% tomorrow. But given rapidly rising oil prices and their possible effect on inflation thanks to the war in Iran, the focus shifts to Jerome Powell’s messaging and policymakers' outlook for future rates.

Bitfinex analysts said the key question is whether policymakers still signal rate cuts in 2026 or are moving towards the idea of no further monetary ease. A more hawkish outcome could weigh on risk assets by strengthening the dollar, they said.

Powell’s take on the recent oil advance will also be in focus. Treating it as a temporary shock would support sentiment, while a more stagflationary view could limit the Fed’s flexibility.

Also coming on Wedesday is the February Producer Price Index report. Tyically not having nearly the weight of the Consumer Price Index, the PPI will be a bit more closely followed given its timing ahead of the Fed meeting.

"A hot PPI number followed by a hawkish FOMC would be the most damaging combination for equities and risk assets," the Bitfinex team continued.

That backdrop is already showing up in market expectations toward a higher-for-longer rate path, according to Vetle Lunde, head of research at K33.

The probability of rates staying unchanged through the July meeting has jumped to over 60% from 22% last month, with potential cuts now pushed further into late 2026, he said in a Tuesday note.

For now, price action will likely remain muted. "We expect the $74,000–$76,000 region to cap price momentarily," Bitfinex analysts concluded.