From decrypt by Vismaya V

Bitcoin is the most valuable crypto asset by market cap. Image: Shutterstock

Bitcoin (BTC) soared past the $105,000 mark on Wednesday as investor sentiment shifted following the Federal Reserve’s decision to pause its interest rate cuts. 

The world’s largest crypto, which initially dipped to $101,800 after the announcement, quickly rebounded, marking its highest level in three days.

During the Federal Open Market Committee meeting, the Fed left its benchmark interest rate unchanged, keeping it within the target range of 4.25% to 4.50%. 

Since President Donald Trump’s election victory in November, Bitcoin has gained over 50%, fueled partly by expectations of more crypto-friendly policies under his administration.

As the Federal Reserve continues to monitor economic data, traders remain cautious but optimistic about Bitcoin’s trajectory. 

“Immediate growth, as we’ve seen in previous bull cycles, may not follow as much of the optimism surrounding Trump’s stance on crypto has already been priced in following recent bullish trends,” Gracy Chen, CEO of Bitget, told Decrypt. 

The interest rate pause comes after three consecutive rate cuts since September, which slashed the federal funds rate by 100 basis points. 

Fed Chair Jerome Powell said during a post-meeting press conference that continued economic strength and persistent inflation influenced the decision to hold rates steady.

Powell noted while inflation has eased significantly from its 2022 peak of 9.1%, it remains at 2.9% annually, making further rate adjustments uncertain.

The Fed chair’s remarks initially pushed Bitcoin and equities higher, with BTC crossing $103,000 before surging further.

Traditional markets showed a mixed response, with the Nasdaq falling 1.1% and the S&P 500 declining 0.9%. Gold remained in demand, holding steady above $2,750 in early Asian trading on Thursday.

Powell, when asked about digital assets, stated that U.S. banks are free to serve crypto customers as long as they manage associated risks. 

The Fed chair also hinted at the need for clearer regulations from Congress, which many industry participants viewed as a positive development.

The broader crypto market responded positively to the Fed's decision, with Ethereum (ETH) and Solana (SOL) trading in narrow ranges. ETH is up 2% to $3,184, while SOL has gained 4.1% to $239, CoinGecko data shows.

Despite recent gains, some analysts warn that Bitcoin’s rally could face resistance.

The world’s largest crypto briefly hit a record $109,241 before President Trump’s inauguration in January but has since retraced.

“While some believe the crypto market will get significant attention from the new administration, it’s important to temper price expectations,” Chen said.