Bitcoin (BTC) has jumped by almost 8% to reach its two-week high of $87,470 on March 20, a day after the Federal Reserve’s March interest-rate decision.

The Federal Open Market Committee (FOMC) voted to keep rates steady in the 4.25%-4.5% range and signaled only two rate cuts in 2025, consistent with its December outlook.

Here are five key takeaways from the Fed’s decision and its potential impact on Bitcoin.

The Fed’s dot plot shows policymakers still anticipate two 0.25% rate cuts in 2025, keeping the federal funds rate above 4%. Markets had priced in three to four cuts earlier this year, meaning Bitcoin’s rally suggests relief that no additional hawkish surprises emerged.

Historically, Bitcoin has outperformed in easing cycles:

Lower interest rates typically benefit risk assets like Bitcoin by reducing the opportunity cost of holding non-yielding investments.

The Fed announced it would slow its balance-sheet reduction (QT) from April, cutting monthly Treasury runoff from $25 billion to $5 billion while keeping mortgage-backed securities (MBS) runoff at $35 billion per month.

Historically, Bitcoin and other crypto assets tend to rally when liquidity flows back into markets.

The Fed removed its previous statement that risks to inflation and employment were “roughly in balance,” instead acknowledging heightened economic uncertainty.

Bitcoin could experience increased volatility in the coming months as economic risks grow, including a potential trade war and stubborn inflation.

In other words, one could anticipate Bitcoin continuing to consolidate inside its prevailing trading range, which is defined by $100,000 as a psychological resistance level and $77,330 as technical support aligning with the 50-week exponential moving average (50-week EMA; the red wave).

The Fed revised its 2025 inflation forecast up to 2.8% (from 2.5%), reinforcing concerns that price pressures remain sticky.

Bitcoin’s reputation as an inflation hedge remains mixed:

If inflation remains elevated, investors may turn to gold as an alternative store of value. Bitcoin, for now, is behaving like a risk-asset, which may dampen its upside sentiment.

Bitcoin’s 4% rally post-Fed announcement aligns with its US-based spot exchange-traded funds (ETF) inflows.

With liquidity conditions set to ease and potential rate cuts later in 2025, institutional interest in Bitcoin may continue to grow. However, it is important to watch for signs of persistent inflation, which may push investors toward safer bets like gold or even the Euro.