After the Fed interest rate decision, will the crypto market start a slow bull run?
On March 19th, New York time, the Federal Reserve announced the second interest rate decision for 2025. The main content of this meeting is as follows:
Maintain the federal funds target range at 4.25%-4.50%, in line with market expectations.
The latest dot plot shows that two rate cuts are expected in 2025, consistent with the expectations in December last year.
The Federal Reserve announced that it will slow down the pace of balance sheet reduction starting on April 1, but will not stop completely. Powell said at a subsequent press conference that the pace of reduction will slow down, but the duration may be longer.
A Federal Reserve survey shows that tariff policies have boosted inflation expectations, so there is currently no urgent need to adjust monetary policy stance.
Overall, this meeting did not release significant bullish signals, and the statement still leans towards hawkish. The number of rate cuts has not increased, and while the balance sheet reduction has slowed down, it is still ongoing, limiting market liquidity in the short term.
The impact of monetary policy on the crypto market
Against the backdrop of the market generally anticipating the first interest rate cut in June, short-term liquidity remains tight, and the trend of Bitcoin and the crypto market is still greatly constrained. After the data was released, the market briefly fell back before rebounding. As of the time of writing, Bitcoin rose to a high of $87,450. Ethereum has shown relative strength, possibly related to the upgrade plan in late April and the documentary “The Story of Ethereum“ launched on Apple TV and Amazon Prime Video. However, these narratives can only affect prices in the short term, and ultimately depend on the trend of Bitcoin and the broader macroeconomic environment.
This Fed interest rate meeting continued the previous policy tone of “slow adjustment”, emphasizing gradual rate cuts based on the economic situation, rather than rapid adjustments. This monetary policy tone provides a macro environment for Bitcoin to emerge from a “slow bull” market.
2025 Federal Reserve Monetary Policy Outlook
Interest rate cut timing and frequency
Based on this dot plot and the mainstream market expectations, the Fed may cut interest rates twice in 2025, with the first rate cut likely to take place in June and the second rate cut possibly in October or December, with a magnitude expected to be between 25 and 50 basis points. If the U.S. economy significantly slows down or even enters a recession, the number of rate cuts may increase.
Shrinking table and expanding table
Although the Federal Reserve announced a slowdown in the pace of balance sheet reduction starting in April, it did not specify an end date. Powell emphasized that the duration of the reduction could be longer, so it may not stop until around October at the earliest. If economic growth slows or significant pressure emerges in the financial markets, such as a sharp decline in US stocks, the reduction may be accelerated or even reconsidered for expansionary policies. Looking back at the rationale for balance sheet expansion in 2008 and 2020, when market liquidity is tight, the Federal Reserve often restarts quantitative easing (QE) to provide the liquidity the market needs.
If future monetary policy develops as expected by the market, that is, interest rate cuts and liquidity easing proceed simultaneously, funds flow back into the market, and Bitcoin and the crypto market are expected to see a more stable upward trend. However, it is necessary to be vigilant that if the interest rate cut is due to economic downturn pressure, the market may experience a short-term decline before warming up again.
The Impact of Bitcoin’s ‘Slow Bull’ Pattern
The slow bull market trend of Bitcoin will profoundly impact the entire crypto industry, including investors’ strategic choices, project development pace of project parties, and the evolution of the industry ecosystem.
（Source: Gate-BTC）
Impact on the project party
If the bitcoin slow bull trend is established, the bull market may last longer, providing more time for quality projects to grow and develop. Similar to the warm period of the earth, the longer the time, the more developed the ecosystem and the higher the species diversity. However, projects lacking long-term planning and relying solely on short-term market popularity may struggle to survive in this market environment, and the industry will experience survival of the fittest.
The impact on the entire industry
The slow bull market will provide more sufficient time for the institutional construction of the crypto market, while reducing the uncertainty brought by the market’s violent fluctuations. The continuous upward trend of the market enables more high-quality projects to start and grow smoothly, while reducing the risk of market bubbles. The slow bull market also helps to enhance investor confidence, attract more funds and users to enter the crypto market, and promote the steady development of the industry.
The impact on investment logic
In the slow bull market, mainstream currencies (such as Bitcoin and Ethereum) will be more attractive, with more stable capital flow and greatly reduced speculation. Compared to the past ‘rapid rise and fall’ market, the market structure tends to mature. The short-term speculative opportunities for altcoins and meme coins will decrease, while high-quality assets will receive more attention. In addition, the participation of institutional investors will be further enhanced, pushing the encryption market towards a more compliant direction. At the same time, traditional financial institutions may lay out new tracks such as DeFi, RWA (real world asset tokenization), bringing new incremental funds, while GameFi and NFT tracks will need to adapt to a more rational investment mode.
Investment strategies and market signals
Asset allocation strategy
In the slow bull market, Bitcoin and Ethereum remain the core assets of the investment portfolio. Mainstream coins are the main allocation direction, while paying attention to the leading projects in concept sectors, avoiding excessive allocation of small market cap altcoins.
Institutional fund flows are also a key focus, especially RWA (such as on-chain government bonds, compliant stablecoins), DeFi blue chips (such as Lido, EigenLayer), leading DEX (such as Uniswap, Curve), as well as GameFi and SocialFi tracks.
Trading strategy
In terms of trading strategies, holding for the long term (HODL) and dollar-cost averaging are more suitable for a slow bull market, and the frequency of short-term trading should be reduced. For investors with a higher risk tolerance, leverage tools can be used moderately when the market trend is clear, but risk management must be strictly controlled.
In addition, investors should pay attention to key market signals, such as the direction of the Federal Reserve’s monetary policy adjustments, the inflow of funds into Bitcoin spot ETFs (ETF sub_script_ions and redemptions) BTC price significant impact）、on-chain capital flows (such as exchange net outflows), and the correlation between the US stock market VIX fear index and Bitcoin volatility.
Conclusion
The Bitcoin market is gradually moving towards institutionalization and maturation, with its logic of ups and downs becoming more and more similar to the US stock market (especially tech stocks). The next market may present a “slow bull” pattern, with continuous inflow of ETF funds, increasing institutional investments, and improving market maturity, shaping a long-term stable upward trend.
An important feature of the slow bull market is the differentiation of the market, with significant differentiation between mainstream assets, thematic sectors, and investor behaviors. This process will not happen overnight, but is part of the long-term evolution of the crypto market. Ultimately, this differentiation may propel Bitcoin to new heights, making it a more mature asset class.
Currently, the expectation of the Fed rate cut is still there, and there is still room for the development of the fourth round of Bitcoin halving market. Investors need to adjust their mindset to adapt to the new cycle with patience and strategy.
