Fed keeps rates unchanged as analysts warn crypto bounce could be a bull trap

The Federal Reserve on March 18 left the federal funds rate at 3.5%–3.75%. Crypto market sentiment improved after the decision as some traders positioned for a rebound, while Bitcoin fell 4.35% to about $70,790.

Crypto sentiment platform Santiment linked the steady policy to hopes for a bullish relief rally. Its social media discussion score rose from roughly 9 to 71 in the hours after the announcement. “For now, traders are expecting a bullish relief rally in spite of no changes being made,” the firm wrote on X, adding that bearish price action tied to the lack of cuts appeared earlier in the week.

Market data show Bitcoin is up 3.56% over the past 30 days, reflecting improved medium-term returns even as near-term trading remains cautious. The outcome was widely anticipated, shifting attention to the timing of potential easing. Many in the market are watching for possible rate cuts in 2025 as a potential tailwind for Bitcoin.

Views on how long any bounce might last are still divided. On-chain analyst Willy Woo cautioned that a bull trap could be forming, an apparent uptrend that quickly reverses. By contrast, analyst Matthew Hyland expects a strong move higher once U.S. stocks find a bottom; the S&P 500 is down 3.73% over the past 30 days. Trader Moustache similarly predicted on X that a “massive rally” is coming in the months ahead.

Other gauges of mood point to caution. The Crypto Fear & Greed Index moved back into “Extreme Fear” on Wednesday after briefly improving to “Fear” the day before.