Markets are pricing in a near-certainty that the Federal Reserve will hold interest rates steady this month, with geopolitical tensions cited as a factor. This pause follows recent rate cuts that failed to bolster crypto investor sentiment, raising questions about the immediate impact on digital asset markets.
According to the CME Group’s FedWatch tool, there is a 95.7% chance the Federal Reserve will keep interest rates unchanged this month. This development follows rising tensions between the US-Israel and Iran.
Historically, lower rates encourage riskier investments like crypto by making borrowing easier. However, the cryptocurrency market saw its most significant single-day liquidation event in October 2025 despite an earlier interest rate cut.
Another rate cut in December also failed to boost investor sentiment sufficiently. The current low chance of a cut may not impact crypto markets immediately, as recent Middle-East tensions have already triggered volatility.
Bitcoin fell to the $63,000 price level before recovering to $66,000. President Donald Trump has criticized Federal Reserve Chair Jerome Powell for not reducing rates and named Kevin Warsh as his intended successor.
Many anticipate Warsh would reduce interest rates further if appointed. The Trump family has reportedly made more than $1 billion from cryptocurrency dealings and actively expanded their crypto-related businesses.
