Fed Minutes Hint at Possible Rate Hikes, Sending Bitcoin Lower

Bitcoin slid sharply below $66,500 during Asian trading hours after the Federal Reserve’s January FOMC meeting minutes revealed a more hawkish stance from policymakers. The crypto market reacted quickly as several Federal Reserve officials signaled they could consider interest rate hikes if inflation remains elevated, dampening risk appetite across global markets.

At the Jan. 27-28 meeting, the Federal Open Market Committee voted 10-2 to keep the federal funds rate unchanged at 3.5%–3.75%. This decision followed three consecutive rate cuts totaling 75 basis points between September and December 2025. Governors Christopher Waller and Stephen Miran dissented, advocating for an additional quarter-point cut, citing concerns that the U.S. labor market may require further support. However, most policymakers favored holding rates steady, emphasizing the need for clear evidence that inflation is returning to the Fed’s 2% target before considering additional easing.

Notably, several officials pushed for language referencing potential “upward adjustments” to rates, indicating that rate hikes remain on the table if inflation proves persistent. The minutes highlighted concerns that progress toward price stability could be slower and more uneven than anticipated. Markets now expect the next possible rate cut no earlier than June, with another potential move in September or October.

The hawkish tone coincides with leadership uncertainty at the Federal Reserve. Chair Jerome Powell’s term ends in May, and President Donald Trump has nominated former Fed Governor Kevin Warsh as his successor. While the White House has described inflation as stable, the Fed’s preferred inflation measure, the Personal Consumption Expenditures Price Index, is projected to re-accelerate, complicating the outlook for monetary policy.

Bitcoin fell from around $68,300 to below $66,500, marking a 1.6% daily decline. Rising U.S.-Iran tensions and a surge in oil prices added to broader market volatility. Increased trading activity following the Lunar New Year amplified selling pressure, leaving cryptocurrency markets sensitive to further inflation data and Federal Reserve signals.