Bitcoin steadies near $90,000 as Federal Reserve hits pause on rate cuts
By isabelle // 2026-01-29
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  • The Federal Reserve paused its rate-cutting campaign, holding rates steady.
  • Chair Powell signaled a shift to a neutral monetary policy stance.
  • Bitcoin's price remained stable near $89,000 following the expected decision.
  • Powell highlighted tariffs as a key, but potentially temporary, inflation driver.
  • Questions about the next Fed chair introduce future policy uncertainty.
The Federal Reserve pressed pause this week, holding interest rates steady and sending a clear signal that its aggressive rate-cutting campaign is over for now. Bitcoin, the world's largest digital asset, hovered around $89,000 in the aftermath, as traders digested a new, more cautious phase of monetary policy. The decision, announced on Wednesday, keeps the benchmark federal funds rate in a range of 3.5% to 3.75%, halting a streak of three consecutive cuts. Chair Jerome Powell framed the move as a shift to neutral ground, a development that crypto markets watched closely for clues about future financial conditions. This pause did not come as a shock. Markets had overwhelmingly anticipated the hold, with pricing tools showing a near-certain probability of no change. The Federal Open Market Committee voted 10-2 to keep rates steady, with Governors Stephen Miran and Christopher Waller dissenting in favor of another quarter-point reduction. The committee stated the economy continues to expand at a "solid pace," but noted job gains "have remained low" and inflation "remains somewhat elevated."

A shift to neutral ground

Powell underscored a significant shift in posture. After cutting rates by a cumulative 175 basis points over the past year, he indicated the Fed now views policy as close to neutral. "It’s hard to look at the incoming data and say that policy is significantly restrictive at this time," Powell said at his press conference. He described the current stance as "loosely neutral or somewhat restrictive — it’s in the eye of the beholder." This framing is critical. It suggests the emergency stimulus mode is off, replaced by a watchful waiting game. The immediate market reaction was muted. Bitcoin briefly dipped from around $89,600 to $89,000 following the announcement before recovering some losses. Other major cryptocurrencies like Ethereum showed little movement. Analysts had expected this calm. "With markets not pricing any rate change, the meeting itself was unlikely to move markets," said Gabe Selby, head of research at CF Benchmarks. The focus, it seems, has moved beyond the certainty of a pause to the uncertainty of what comes next.

Inflation, tariffs, and leadership questions

Two major themes dominated Powell's remarks: the sources of inflation and the future of Fed leadership. On inflation, Powell pointed directly to tariffs as a key driver of elevated goods prices, though he characterized them as a largely "one-time" effect. "The expectation is that we will see the effects of tariffs flowing through goods prices peaking and then starting to come down," Powell said, barring new trade actions. This attempt to compartmentalize tariff-driven inflation reveals the Fed's desire to look past it, but markets remain wary of persistent price pressures. Perhaps more intriguing are the questions surrounding who will guide the Fed forward. Powell's term as chair is concluding, and his dissenting colleague, Christopher Waller, is seen as a potential successor. When asked what advice he would offer his eventual successor, Powell was direct: "Stay out of elected politics. Don’t do it." This emphasis on independence comes as betting markets on Polymarket currently favor Rick Rieder as the next Fed chair, followed by Kevin Warsh, with Waller in third place. The philosophical leanings of the next chair could profoundly impact monetary policy for years. For bitcoin, this environment creates a familiar tension. The asset has historically thrived in conditions of easy money and dollar weakness. Some analysts see a potential catalyst in a broader loss of faith in the U.S. dollar. "There’s a crisis of confidence in the U.S. dollar," said Kyle Rodda, a senior market analyst at Capital.com. This sentiment, fueled by erratic trade and fiscal policy, has recently propelled gold to record highs while bitcoin has consolidated. The current moment presents a crossroads. The Fed is no longer tightening, removing a major headwind, but it is also not rushing to provide fresh stimulus, capping near-term euphoria. Bitcoin's ability to hold near $90,000 suggests a base of support, but its next major move may depend on a new catalyst, whether it's a sudden shift in dollar dynamics, a change in Fed leadership, or the long-awaited spark that repositions it from a speculative tech asset to a recognized hedge in a shifting global monetary order. The Fed's pause is not an end, but an intermission before the next act. Sources for this article include: BitcoinMagazine.com Forbes.com TheBlock.co
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