How do Federal Reserve interest rate decisions impact crypto markets?

Federal Reserve interest rate decisions significantly affect cryptocurrency markets. When the Fed raises rates, investors typically shift from riskier assets like crypto to safer options like bonds, causing crypto prices to drop. Higher rates also increase borrowing costs, reducing leverage trading activity. Conversely, lower rates encourage risk-taking and borrowing, boosting crypto demand. The relationship isn't direct—market sentiment, inflation expectations, and macroeconomic conditions also matter. Bitcoin and other cryptocurrencies tend to move inversely to rising rate expectations. Traders monitor Fed announcements closely because they signal future economic conditions and can trigger substantial price movements across crypto markets.