Riddler strikes again—Powell maintains interest rates, the true signal for the crypto market

The Federal Reserve’s latest policy meeting has concluded, and the results were no surprise: interest rates remain at 3.5% to 3.75%. At first glance, it seems like a routine move, but for investors paying attention to the crypto market, the decision by the “mysterious” Powell hides deeper implications beyond the numbers themselves. Many see “no rate cut” and instinctively interpret it as a bearish signal, but the reality is far more complex.

The “Mysterious” Game of Policy Stability

Powell is skilled at using vague language and policy hints to guide market expectations. This “mysterious” approach has become a classic tactic of the Federal Reserve. This time, the “hold steady” stance essentially demonstrates the Fed’s policy resolve at this special time horizon of 2026. The tariffs and fiscal pressures from the Trump administration have been exerting invisible political pressure, demanding rate cuts to ease economic burdens. Powell has resisted these pressures, choosing to maintain the status quo, which underscores the Fed’s effort to preserve its institutional independence.

For the crypto market, this signal is far more meaningful than an immediate rate cut. Stable policy expectations can eliminate market uncertainty, and uncertainty is the biggest enemy of institutional capital. Once the policy path becomes clear, large funds tend to accelerate their entry.

Three Layers of Logic Revealing the Deep Meaning of Unchanged Rates

The apparent “no news” actually conceals three key market signals.

First, from an inflation perspective, the Personal Consumption Expenditures (PCE) index is currently around 2.8%, still above the Fed’s 2% target. The Fed’s cautious decision to keep rates steady aims to prevent overly rapid monetary easing from reigniting inflation. However, neighboring the S&P 500 has already broken through 7000 points, indicating that market funds have already expressed their stance through action—interest rates have peaked, and the subsequent trend will only move downward.

Second, there is a “hidden current” of liquidity. Although official rates haven’t been lowered, the Fed has quietly begun adjusting its balance sheet by purchasing short-term bonds. It’s like the dam’s sluice gates haven’t fully opened, but the bottom pumps are continuously transferring liquidity outward. This additional liquidity will eventually flow into risk assets, including the cryptocurrency market.

Third, policy certainty itself is the biggest market signal. Investors fear not specific policy directions but uncertainty filled with variables. Since the Fed’s stance is now clear—that interest rates are no longer tightening—long-term capital has ample reason to enter.

Market Signals Are Clear, Institutional Funds Are Moving

History is often surprisingly similar. During the end of 2024, the market experienced oscillations due to uncertainty—will there be a 25 or 50 basis point rate cut? Once the policy tone stabilized, Bitcoin immediately embarked on a rally to new highs.

The current logic is exactly the same: as long as rates are not raised, risk assets are given a “green light.” Institutional investors (especially ETF managers managing huge sums) fear uncertainty the most. With the Fed’s policy direction now clear, large capital inflows are only a matter of time.

Currently, BTC is trading at $70.36K, down 0.53% in the past 24 hours; ETH is at $2.12K, up 1.05% in the past 24 hours. This divergence reflects the market’s anticipation of further liquidity easing signals.

Different Investor Strategies

Long-term holders should not rush to exit just because there’s no rate cut in the short term. A 3.5% interest rate environment is far from “tightening,” and there are expectations of 1 to 2 rate cuts in the second half of 2026. Every current pullback could be a shakeout and accumulation phase by institutional whales, so it’s wise to stagger positions and hold spot assets firmly.

Short-term traders and derivatives players should pay close attention to liquidity shift signals. The market is currently in a sideways phase after policy positives were confirmed, and volatility may temporarily contract. The key is to monitor the DXY dollar index—once the dollar begins to weaken, it signals that the crypto rally is about to start. At this point, strict leverage control and focus on BTC’s performance at key support levels are essential.

In sector allocation, besides focusing on mainstream Bitcoin, prioritize areas most sensitive to liquidity. Artificial Intelligence (AI) sectors and Layer 2 networks (L2) tend to benefit first when liquidity is abundant. The newly added liquidity often overflows into these high-beta assets fastest.

Trends Over Predictions: Seeing the Direction Clearly Matters Most

Rather than obsessing over Powell’s every word and its implied meaning, it’s more important to grasp the overall market trend. The “mysterious” game of predictions often only creates noise; understanding the underlying logic is what truly matters. The long-term logic of global monetary easing remains unchanged, and the role of crypto assets as an inflation hedge remains intact.

Stable interest rates mean the policy framework is established, and the logic for institutional capital to enter is gradually being validated. Investors lost in the “mysterious” words often miss big opportunities. The real winners are those who see the trend clearly and position early. When policy certainty increases, markets tend to respond with even more vigorous rallies.