Macro analysis: Fed interest rates and the relationship to the crypto market
The crypto market, like the other asset markets, is affected by macroeconomic factors. The interest rates of the American Federal Reserve (the Fed) are one of the most influential factors.
Thank you for reading this post, don't forget to subscribe!The relationship between interest rates and crypto
High interest rates = “expensive” money and less attractive risk assets. Risk-free interest rate investments (government bonds) compete with assets like stocks and crypto. Low interest rates = “cheap money”, flow to risk assets. 2020-2021: zero interest rates = peak crypto. 2022-2023: sharp interest rate hikes = “crypto winter”.
2024-2025: the policy axis
In 2024, the Fed began interest rate cuts. A decrease from 5.5% to about 4%. This, along with the spot ETF, contributed to a strong bull market. In 2025, interest rates continue to decline gradually, which reinforces the positive sentiment.
Is Bitcoin an “Uncorrelated Asset”?
An old claim is that Bitcoin is not correlated with stock markets. But in practice, during times of stress, Bitcoin sells along with the S&P 500. In the longer term, the correlation is lower. The debate continues.
What to follow?
The FOMC meetings, inflation data (CPI), and labor market data are the main parameters that influence the Fed’s decisions and consequently the crypto market. Bitcoin as a store of value.
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