Federal Reserve keeps interest rates unchanged: How Powell's hawkish risks before stepping down could suppress the crypto market

The Federal Reserve’s April 2026 interest rate decision became one of the most uneventful policy meetings in recent half-year history.
Futures trading data shows that the market’s probability of maintaining interest rates within the 3.5%–3.75% range has reached 100%.
This extreme consensus is not due to market inertia but is based on three consecutive months of unexpectedly resilient core PCE data.
The pace of inflation decline has shown noticeable stickiness around 3.5%, and the positive feedback loop between service sector prices and wage growth has yet to be broken.
Meanwhile, the US real GDP growth rate has slowed to about 1.8%, but remains above recession thresholds.
This intermediate state of “slowing growth but not stalling, elevated inflation but not accelerating” means the Fed sees no urgency to cut rates, nor sufficient reason to hike further.
As a result, the market’s focus has shifted entirely from “interest rate direction” to “how long will rates stay unchanged.”

What Hidden Hawkish Risks Does Powell’s “Last Dance” Conceal?

Powell will officially step down as Fed Chair on May 15, and this FOMC meeting is his final public policy statement during his tenure.
Historically, departing central bank chiefs tend to maintain their existing policy tone rather than signal easing, to avoid unnecessary market volatility before the transition.
More importantly, Powell has consistently prioritized “inflation returning to 2%” as his core narrative.
If he hints at rate cuts or softens his stance in the last month, it could be interpreted as political compromise by the market and would weaken his policy legacy.
Therefore, this meeting’s statement and press conference are highly likely to contain hawkish signals: reaffirming “inflation remains too high,” emphasizing “the labor market is still tight,” refusing to commit to any rate cut timetable, and even actively guiding the market to lower expectations for rate cuts in the second half of 2026.
This “final tough stance before departure” communication strategy is essentially a form of expectation management—using language to push up short-term rate expectations when actual rate hikes are off the table, thereby suppressing overly rapid easing of financial conditions.

How Does the Interest Rate Path Transmit to Cryptocurrency Asset Pricing Logic?

Although some investors view crypto assets as independent from traditional finance, macro-level pricing has never truly escaped the constraints of dollar liquidity and risk-free rates.
When the Fed maintains rates at 3.5%–3.75% and expectations for rate cuts are suppressed, the opportunity cost of holding non-yielding assets like Bitcoin remains high.
Institutional investors, when allocating across asset classes, dynamically assess Bitcoin’s expected return against the actual yield of US Treasuries (currently around 1.2%–1.5%).
More importantly, the issuance and collateralization of stablecoins are highly dependent on short-term US Treasury yields—when T-bill yields stay above 3.5%, stablecoin issuers have stronger financial incentives to maintain or even expand issuance.
However, this liquidity does not automatically flow into the crypto secondary market; instead, higher yields attract risk-averse capital to stay in stablecoins or on-chain government debt products, creating a “liquidity siphon” from high-risk crypto assets.
This structural suppression differs from the rapid price drops seen during the 2022 rate hikes; it is a slow, persistent, and hard-to-reverse valuation compression.

How Does the Suppressed Rate Cut Expectation Specifically Pressure the Crypto Market?

Based on Gate’s market data, as of April 29, 2026, Bitcoin is priced at $61,250 USD, with volatility over the past 30 trading days narrowing to below 12%, the lowest since 2024.
Ethereum trades at $3,020 USD, with its recent gains diverging from Bitcoin but still below its early-year highs.
From a microstructure perspective, three typical pressure transmission paths are observed:
First, the perpetual contract funding rate has fallen from an annualized 6%–8% at the start of the year to 2%–3%, indicating continued suppression of leveraged long positions.
Second, the 30-day rolling correlation between Bitcoin and actual US Treasury yields has risen to -0.67, meaning that a 10 basis point increase in rates statistically corresponds to about a 1.2% decline in Bitcoin’s price.
Third, spot ETF capital flows have experienced five consecutive weeks of small net outflows, totaling about $850 million USD, contrasting sharply with large inflows into US Treasury money market funds during the same period.
All these data points point to a conclusion: the ongoing delay in rate cuts is exerting systemic pressure on the crypto market through leverage costs, alternative asset yields, and institutional fund flows.

Why Might May’s Key Events Become the Next Turning Point?

While April’s FOMC was uneventful, three key variables in May could break the current deadlock:
First, Powell’s first public speech after officially stepping down on May 15—whether the new Chair will immediately adjust the communication framework, especially regarding inflation and employment data weightings, will directly influence market reassessment of policy paths for the second half of the year.
Second, the April CPI report released on May 22—if core inflation shows an unexpectedly sharp decline (e.g., month-over-month below 0.2%), previously suppressed rate cut expectations could rebound quickly.
Third, the reactivation of the US debt ceiling at the end of May—Treasury’s cash management strategy for the General Account (TGA) will influence short-term liquidity distribution.
If the Treasury issues大量短期国债吸收市场资金，将进一步收紧金融条件；反之，若动用TGA余额释放美元，则可能为加密市场提供阶段性支撑。
These three variables are interconnected: inflation data determines whether the Fed can cut rates, the new Chair’s stance influences market expectations, and debt management affects actual liquidity conditions.

How Should Investors Interpret Macro Pressures and Opportunities?

In the current macro environment, the risk-reward profile of purely directional bets on interest rate paths is deteriorating.
A more operationally feasible framework is shifting focus from “predicting rate cut timing” to “assessing valuation compression.”
Specifically, three indicators can help determine whether the market has overly priced in delayed rate cuts:
The deviation of Bitcoin’s 200-week moving average from its current price,
The monthly change rate of total stablecoin supply,
And the on-chain long-term holder SOPR (Spent Output Profit Ratio).
Historical backtests show that when these three indicators simultaneously reach extreme levels (e.g., deviation >30%, supply monthly growth rate at historical highs), it signals that the market may have overextended its expectations of delayed rate cuts, presenting potential opportunities.