The implications of the Fed's potential gradual interest rate cuts for Bitcoin and the crypto market.

The CME FedWatch tool now shows a 12.4% probability of a Fed interest rate hike at its April 29 meeting, a figure that was absent a week ago, while all predictions of a rate cut at this meeting have dropped to zero.

This shift marks the fastest pace of Fed interest rate expectations adjustment in years and has a direct impact on Bitcoin and the crypto market in general, which had previously surged for months on the assumption that interest rates would be cut in 2026.

The possibility of a Fed interest rate hike has dispelled expectations of a Bitcoin price increase following a rate cut.

A month ago, the April FOMC meeting predicted an 82.5% chance of keeping interest rates in the 350-375 basis point range and a 17% chance of lowering them to 325-350. The option of raising interest rates by the Fed was not mentioned at all.

As of March 22nd, the probability of a rate cut at the April meeting is 0%. Currently, the CME FedWatch only has two scenarios: keeping interest rates at the current level (87.6%) or raising them by 375-400 basis points (12.4%).

According to expert Ash Crypto, the increased probability of an interest rate hike next month is concerning, as the Atlanta Fed's Market Probability Tracker now shows the likelihood of a rate hike exceeding the likelihood of a rate cut for the first time in three months.

Ryan Detrick from Carson Group suggests that this revision of expectations is due to sharply rising commodity prices because of the war.

"War and commodity price volatility have increased the probability of the Fed raising interest rates," Detrick Chia .

For Bitcoin and the crypto market, the disappearance of the prospect of interest rate cuts means the loss of a crucial pillar of the uptrend, a factor that propelled the price of BTC from $64,000 to $76,000 in early March.

Low interest rates typically encourage investors to shift to riskier assets like Bitcoin (BTC). When expectations of further interest rate reductions fade and instead the possibility of increases emerges, Capital will flow out of these assets.

The oil price shock caused by the conflict in Iran increases the likelihood of the Fed raising interest rates.

Brent crude oil prices have risen by approximately 50% since the US-Iran conflict began on February 28th, reaching a peak of $112 per barrel as the Strait of Hormuz was nearly closed to oil tankers .

Inflation expectations have risen to 5.2%, significantly higher than the Fed's 2% target.

At its March 18 meeting, the Fed kept interest rates unchanged at 3.5% to 3.75%, while raising its year-end PCE inflation forecast to 2.7%. The new DOT plot shows the Fed now only expects to cut interest rates once by 0.25% in 2026, instead of twice as previously planned.

Bank of America advises clients not to completely rule out the possibility of the Fed raising interest rates in 2026. The bank outlines three conditions that could lead to an interest rate hike, including:

• Jerome Powell is still the Chairman of the Fed.
• Unemployment rate remains below 4.5% (stable labor market).
• Oil prices remained at $80-$100 per barrel for an extended period.

"The Fed hasn't changed anything. It's the market that has changed everything around the Fed," one analyst commented .

The impact of a potential Fed interest rate hike on Bitcoin price and the crypto market.

Bitcoin's price has fallen from a six-week high of nearly $76,000 to $68,739 over the past week as the possibility of a Fed interest rate hike emerged and oil prices fluctuated sharply .

During this period, the correlation between BTC and the S&P 500 index reached 89%, indicating that this decline was driven by macroeconomic factors rather than solely by the crypto market.

Analysts at DefiWimar warn that the swap market is currently pricing in a 50% probability of a Fed interest rate hike later this year.

Meanwhile, market forecasts on Kalshi show a 64% probability of an increase by 2027, suggesting that the crypto market's optimism based on interest rate cuts may have been misjudged for the remainder of 2026.

However, not everyone agrees that the risk of a Fed interest rate hike is real. Trader MarketSync_ called headlines about a potential revaluation "information overload," pointing out that 93.8% of Futures Contract still favor a no-rate hike at the next meeting.

“Fed funds futures are overreacting. 93.8% versus 6.2% says it all – this is just media hype, not policy reality. Liquidation flows haven’t changed significantly enough to create fear of a pivot,” they wrote .

Meanwhile, others predict that oil prices will fall and the Fed will cut interest rates by late spring.

The answer to what the disappearing probability of an interest rate cut means for Bitcoin and the crypto market is quite simple. If oil prices remain above $100 and the Strait of Hormuz remains closed, the likelihood of the Fed raising interest rates will continue to increase.

Every percentage point increase in that number reduces the reason for institutional Capital to flow into BTC and other risky assets.

The 12.4% probability of an interest rate hike is still quite small, but that's a level that was 0% seven days ago. The trend of this number is more important to the crypto market than its value itself.