Did the US Federal Reserve's decision exceed expectations? JPMorgan predicts the Federal Reserve will "stand firm," crushing the crypto market’s rate cut dreams.

While market participants are still eagerly awaiting signals of rate cuts, the investment banking circle is sending a completely different message. JPMorgan’s latest forecast for the US Federal Reserve’s interest rate decision breaks the market consensus on rate cuts, indicating that the Fed will maintain the current stance for a considerable period and may even raise rates in the future. This is undoubtedly a heavy blow to the crypto asset market, which has been betting on easing policies.

Market Expectations Diverge: The Rate Cut Consensus Is Crumbling

According to Reuters, JPMorgan analysts believe the Federal Reserve will keep the benchmark interest rate in the 3.5% to 3.75% range, with no policy adjustments expected at least through the first half of this year. Even more surprisingly, the bank predicts that the Fed’s next move may not occur until Q3 2027, and it is highly likely to be a 1 basis point (25 basis points) hike rather than the widely expected rate cut.

However, the CME FedWatch Tool reflects a completely different market sentiment. Traders are actively betting on rate cuts, with expectations of at least two 1 basis point reductions this year. Many crypto analysts share similar views, believing that lower borrowing costs will reignite risk appetite in the market, thereby benefiting assets like Bitcoin. Lukman Otunuga, senior market analyst at FXTM, pointed out: “Despite facing multiple challenges in 2025, Bitcoin is expected to rebound strongly in 2026 driven by decreasing circulating supply and rate cut expectations.”

This divergence highlights the ongoing uncertainty about the direction of the US interest rate decision, with the gap between market expectations and policymakers widening.

Strong Labor Market Supports Steady Rates

JPMorgan’s cautious stance on rate cuts mainly stems from its assessment of the US economic fundamentals. According to the latest employment data released in December 2025, the US unemployment rate unexpectedly fell to 4.4%, indicating that the resilience of the labor market far exceeded expectations and showing no signs of weakening typically observed before rate cuts by the Fed.

This robust economic backdrop is also linked to another key indicator—the 10-year US Treasury yield. JPMorgan pointed out that this benchmark for global asset pricing has recently shown technical signals of positivity, with the potential to challenge the 6% level within the next year (currently around 4.18%). If this scenario materializes, it would put substantial pressure on overvalued assets and risky investments.

On the supply side, strong fundamentals are also suppressing downward inflation pressures. JPMorgan analysts emphasized that although a significant slowdown in the labor market or a sharp decline in inflation could still prompt the Fed to pivot later this year, current economic data do not support such a scenario.

Investment Banks Shift Collectively: Rate Cut Windows Continue to Delay

JPMorgan’s conservative forecast is not an isolated case. The strong economic fundamentals have prompted major banks like Goldman Sachs and Barclays to revise their expectations for the US rate decision. These institutions initially anticipated the Fed would start cutting rates in March or June this year, but their latest forecasts have pushed this timing to September or December, and in some cases, even to 2027.

This shift reflects a deeper market understanding of the resilience of the US economy. Although the crypto community is pinning hopes on the Fed chair transition—Jerome Powell’s term ending in May 2025, with the market generally expecting a more moderate policy stance from his successor—if the economic fundamentals remain strong, even a new chair’s appointment is unlikely to significantly accelerate the policy shift.

For crypto assets that rely on liquidity-driven growth, the delay in the US interest rate decision adds short-term uncertainty. The postponement of rate cuts means the easing environment may take longer to materialize, challenging the support for risk asset prices. Market participants need to adjust expectations and prepare for a prolonged high-interest-rate environment.