Interest Rate Decision Remains Steady, Trump Escalates Tensions: How Did Cryptocurrencies Move?
Cryptocurrency markets were eagerly awaiting the US Federal Reserve's (Fed) interest rate decision on Wednesday and the speech of Fed Chair Jerome Powell. In addition, US President Donald Trump's statements regarding the Iran-Israel tensions drew attention in the market. So, how did all this affect cryptocurrencies?
The Fed's interest rate decision was announced in line with expectations
Cryptocurrency markets generally maintained their resilience despite both the US Federal Reserve's (Fed) interest rate decision and the increasing geopolitical tensions in the Middle East. However, there is a volatile picture beneath this calm outlook. Although major assets such as Bitcoin (BTC), Ethereum (ETH), XRP and Solana (SOL) experienced short-term gains after the Fed kept interest rates steady at 4.25%-4.50% in line with expectations, a clear direction for investor sentiment still remains uncertain.
The Fed’s economic projections released on Wednesday showed that two interest rate cuts were still on the table by the end of 2024, but expectations for 2026 and 2027 pointed to a slower rate cut process. Chairman Jerome Powell’s “wait-and-see” approach delayed markets from finding a clear direction, while also revealing the fragility of altcoins. In particular, artificial intelligence and real asset (RWA)-themed tokens lost 4.8% and 3%, respectively.
Tensions are rising in the Middle East
On the other hand, the escalating tensions in the Middle East were another factor that increased anxiety in the markets. News that the US was considering a direct military intervention in Iran suppressed risk appetite in both traditional and cryptocurrency classes.
While the tension between Iran and Israel continues, remarkable statements continued to come from US President Donald Trump. Speaking to reporters, Trump stated that he wanted to end the conflicts in the region, but avoided giving a clear answer on whether the US would make a military move against Iran.
Claiming that Iran was in a defenseless position, Trump said, “I can’t say we won’t strike Iran.” He added that he had called on the Iranian side to come to the White House, but that this opportunity was not taken advantage of. He stated that the country’s air defense systems had been largely disabled and that he had a phone call with Russian President Vladimir Putin, who could also take on a possible mediation role.
Trump indicated in his statements that patience with Iran was running out. He said, “We expect them to surrender, if they don’t, we will target military facilities,” and that possible scenarios were on the table. While acknowledging that no concrete gains had been made yet, he also emphasized that serious progress had been made.
Trump, who drew attention to the fact that the coming days would be critical, stated that Iran had been posing a threat for years and that its desire to attain nuclear weapons capacity posed a great threat. “Next week will be very decisive, perhaps even sooner,” Trump said, signaling that developments in the region could take shape rapidly.
Altcoins fell sharply
This situation led to sharp sales, especially in altcoins. While XRP, Cardano (ADA) and Solana lost more than 1% in value in the last 24 hours, Dogecoin (DOGE) gave up its previous gains with a decline of nearly 10% on a weekly basis. Ethereum, on the other hand, erased its weekly gains and fell by 0.7%.
Interest in Bitcoin ETFs continues
Despite all these developments, institutional interest in spot Bitcoin ETFs in the US drew attention. While $389 million in new inflows were recorded in just one day on Wednesday, $19 million in additional funds were flowed into Ethereum ETFs. This reveals that investors continue to seek a “digital safe haven” against volatility.
Despite its 13% increase since the beginning of the year, Bitcoin has been on an indecisive course as of this week. “Bitcoin is caught between two worlds, neither responding to risk appetite nor bouncing on geopolitical risks like gold,” FxPro analyst Alex Kuptsikevich said.
