The cryptocurrency market faced huge sales pressure on May 28 as traders responded to uncertainty in U.S. interest rate policy.
Global cryptocurrency market capitalization fell 4.2% to $3.52 trillion, leading tokens such as Ethereum (-1.2%), XRP (-3.6%) and Solana (-4.1%).
Bitcoin is still above $107,000, but has dropped 2.4% in the past 24 hours.
The Fed notes that the risks of inflation and unemployment are high and remain vigilant, monitoring may exacerbate the development of any kind of risk.
FOMC chose to stabilize the interest rate on Fed funds in the range of 4.25% to 4.50% within its target range, without any commitment to cuts or rate hikes at present.
Instead, they say their decisions will be data-driven and will address any risks that arise in the future.
They also said they will continue to use the Fed’s balance sheet reduction process, which actually means the Fed will gradually sell securities backed by the U.S. Treasury and mortgage-backed to strengthen financial conditions.
Finally, as usual, the Fed promised to return inflation to 2%, consistent with maintaining large amounts of jobs. Additionally, it said that if new risks are revealed, it is ready to take any approach to monetary policy.
Now, the market is reevaluating their expectations. According to CME’s FedWatch tool, the likelihood of a tax rate reduced in September is now 48.1%, with a 40.3% change expected to remain unchanged.
Meanwhile, Kalshi’s data predicts that the total rate in 2025 will be reduced from four to less than two total cuts.
Relying on the Fed’s decision has also slowed down the balance sheet, traders are now preparing for long-term policy tightness, a backdrop that is likely to limit cryptocurrencies.
The market has sunk uncertainty due to the Fed’s decision, and it first appeared on The Street on May 28, 2025
