The crypto market declined today after the US Federal Reserve revealed its hawkish stance on monetary policy. Via the FOMC minutes released on Wednesday, the policymakers signaled their willingness to consider further rate hikes if inflation fails to ease. As a result, top assets like Bitcoin, Ethereum, and XRP have faced significant selloffs, sparking investor caution.
Crypto Market Plunges Amid Fed Rate Hike Fears
The crypto market is currently facing extreme pressure, as major cryptocurrencies like BTC, ETH, and XRP are on sustained downtrends. The negative sentiment, which started after the October 2025 crash, has now escalated because of macroeconomic worries.
The FOMC conducted its voting during the January 27-28 meeting and reached a 10-2 decision to maintain rates at their current level of 3.5%-3.75%. This comes after three rate cuts totaling 75 basis points between September and December 2025.
As CoinGape reported yesterday, the Federal Reserve released its FOMC minutes on Wednesday. The report underscores the central bank’s readiness to increase the interest rate if inflation moves closer to its 2% target. The statement read, “Most participants cautioned that progress toward the Committee’s 2% objective might be slower and more uneven than generally expected.”
This has cast a shadow over the Fed’s upcoming decisions, with the probability of rates remaining unchanged now hitting 93%. In other words, the market is almost certain that the central bank will hold the federal funds rate steady at 3.5%-3.75% at its next meeting.
In response to this development, the crypto market took a deep dive, dropping by about 1.52% to reach $2.31 trillion. The crypto market crash has triggered a series of liquidations affecting multiple tokens. The market saw a 0.71% drop in open interest. Traders lost more than $224 million in futures positions during the first 24 hours. Traders who maintained long positions suffered the majority of losses, totalling approximately $164 million.
Bitcoin, Ethereum, and XRP Fail to Surge
Traders maintain sell positions on top cryptocurrencies because they remain uncertain about future Federal Reserve rate cuts after the release of the FOMC minutes.
Amid this latest hint at a possible Fed rate hike, major players are facing increased losses. The BTC price is marked at $67,047, down by 1.66% in a day. Other major cryptocurrencies—Ether and XRP—are also down, plunging by 2.06% and 4.02%, respectively. During this time, Ether was traded for $1,975, and XRP was sold at $1.42.
In addition to this macroeconomic uncertainty, growing geopolitical tensions are also significantly impacting the crypto market. For example, market conditions experienced greater pressure because of rising speculations about a potential US-Iran war, which drove investors to seek safer investment options.