FOMC Minutes Signal Potential Rate Cuts or Hikes as Bitcoin Drops Below $66K

The latest FOMC minutes reveal that the Federal Reserve remains open to additional rate cuts if inflation continues to move toward its 2% target. However, policymakers also signaled that interest rate hikes could be considered if inflation remains elevated or accelerates again. This mixed outlook has created fresh volatility in the Bitcoin and broader crypto market.

According to the January FOMC minutes, several Federal Reserve officials stated that further rate cuts would likely be appropriate if inflation declines in line with expectations. At the same time, many participants believe it may be prudent to keep interest rates steady while evaluating incoming economic data. Some policymakers emphasized that additional cuts may not be justified until there is clearer evidence that disinflation is firmly back on track.

The Fed decided to hold rates steady at its January meeting after implementing three rate cuts last year. Nearly all participants supported the pause, citing still-elevated inflation and continued economic expansion. Notably, several officials suggested adopting a “two-sided” approach to future policy decisions, meaning rate hikes could also be on the table if inflation trends above the Fed’s target.

Recent inflation data has shown tentative signs of cooling. January CPI came in at 2.4%, boosting optimism across financial markets and helping Bitcoin rally toward $70,000 over the weekend. Investors are now closely watching the upcoming PCE inflation data, the Fed’s preferred inflation gauge, for further clues on monetary policy direction.

Following the FOMC minutes release, Bitcoin price fell below the key $66,000 psychological level, trading slightly above it at the time of writing and down around 2% on the day. Market uncertainty surrounding future Federal Reserve rate decisions continues to influence crypto market sentiment. According to CME FedWatch data, there is a 90% probability that the Fed will hold rates steady at the March FOMC meeting, reinforcing expectations of a cautious, data-driven approach.