What the Fed's Status Quo Means for Bitcoin and the Dollar This Week

It’s Wednesday when the Federal Reserve announces its decision on interest rates, and the status quo is what most expect to see. However, the real gold mine for cryptocurrency and financial market traders lies not in the decision to hold bets, but in how Jerome Powell explains it.

The Status Quo Is Keeping the Exchange Rate: What’s at Stake for the Markets

According to CME FedWatch, there is a 96% chance that the Fed will keep rates at 3.5%-3.75%. This is not news — back in December, Powell signaled that the committee had no plans for additional cuts until 2026. The system supported that course this week, and Neel Kashkari, chairman of the Minneapolis Reserve System, recently told The New York Times that it was “too early” to consider further cuts.

However, the status quo does not mean that the markets will remain indifferent. The most powerful signal for them will come through the sequence of words in Powell’s statement and his comments during the press conference.

Soft or Hard Pause: How Powell Can Change the Trajectory of Assets

This is where a key dilemma arises for investors. Bet retention can be interpreted in two ways, and each interpretation has radically different consequences.

Soft pause will mean that the Fed perceives the current pause as a temporary relocation. Powell may keep talking about “considering further adjustments” in his policy statement, signaling that rate cuts can be expected throughout the year. Morgan Stanley predicts just such a scenario, noting that the system seeks to send softening signals, keeping the door open for relaxation. In this case, Bitcoin and stocks will get a powerful boost upwards, as markets love the prospect of cheaper money.

Violent pause will look different. If Powell emphasizes the long-term risks of inflation and the resilience of the economy, markets will understand this as a signal to hold high rates for the long term. This will worsen conditions for risky assets, primarily Bitcoin, and at the same time strengthen the US dollar, as higher real rates make it more attractive to foreign investors.

Keep an eye on the vote of opponents of the pause, especially Stephen Mirand, who was appointed by Trump. If there are more opponents, this will strengthen the arguments in favor of a soft pause, to raise crypto assets higher.

Trump, Affordability, and Inflation Embargo: Why It Matters for Betting

During the press conference, Powell is expected to be asked about the context in which the decision on the status quo is made. President Donald Trump just ordered his representatives to buy $200 billion worth of mortgage securities, claiming that it would lower mortgage rates.

At first glance, this sounds like measures that should solve the problem of the insufficiency of affordable housing. In fact, analysts at ING and Allianz Investment Management note that such purchases risk accelerating demand by raising housing prices rather than lowering them. This will accelerate inflation just as the Fed seeks to avoid renewed inflationary pressures.

If Powell notes this risk and justifies holding bets with the need to fight inflation, then such a comment will strengthen the position of the dollar and weaken Bitcoin. According to ING, only negative economic data, and not the voice of the central banker, will be able to weaken the dollar. Thus, Powell is in a difficult situation: he must satisfy both sides of the issue.

Trump’s tariffs are already included in inflation projections for 2026, but their delaying effect will take place throughout the year. Additional bases in durable goods are likely to increase pain for consumers and squeeze growth rates later.

Forgotten Gold: Pudgy Penguins and the Mood of the Markets

Interestingly, during fluctuations in traditional assets, one particular micro-position shows interesting resilience — Pudgy Penguins as an NFT brand strengthens its presence. Amid this uncertainty, markets are looking for tokenized assets that showcase a larger ecosystem. This is not a major historical trend, but it does tell us something about the behavior of those investors who bet on the “web3 future” even in times of uncertainty.

Bitcoin Real Price Today: Anxiety Response

Bitcoin has already begun to respond to this context. The current price of BTC is $84.87K (as of January 29, 2026), with a 24-hour drop of 5.09%. This is a continuation of the slump that began on the night of the previous trading session, when the crypto asset fell to a new low of the year at $85,200.

In parallel with Bitcoin’s fall, the Nasdaq index also fell sharply by 1.5%, and Microsoft shares fell more than 11% after the fourth-quarter earnings report. This synchronized decline among risk assets suggests broader concerns about possible tough comments from the Fed.

What to Expect: A Three-Step Surveillance Strategy

1. Decision on the status quo will be officially announced, but this is not news - pay attention to the sequence of words in the policy document.

2. Powell’s comments regarding inflation, Trump’s measures, and the prospects for future rates — this is what will change the trajectory. Soft wording raises bitcoin, hard strengthens the dollar.

3. Depends on opponents — If more than one member of the committee expresses disagreement about the pause, this will strengthen the “dovish” scenario.

The status quo is a temporary equilibrium that will spill over next week

For the end result: the status quo is not a static state, but an instantaneous equilibrium before the next wave of decisions. Powell won’t lead to sudden rate changes this week, but his choice of words will be a map for cryptocurrency and traditional market traders for the coming weeks. Gold’s rally, which rose above $5,600 and quickly fell back to $5,200, shows how sensitive markets are to each Fed position report.

The fact that the status quo is a statement in words rather than actual betting changes makes this microphone Powell’s most powerful tool.