Bitcoin Dips Below $66.5K as Federal Reserve Minutes Signal Rate Hike Risk Ahead of Leadership Shift

Bitcoin retreated sharply after the Federal Reserve released minutes from its late-January policy meeting, revealing a more hawkish stance than markets had anticipated.

The minutes from the Jan. 27–28 gathering showed that while the Federal Open Market Committee voted 10-2 to keep the benchmark rate steady at 3.5%–3.75%, several policymakers openly floated the possibility of raising rates again if inflation fails to cool convincingly. The decision followed three consecutive rate cuts between September and December 2025 totaling 75 basis points.

Governors Christopher Waller and Stephen Miran dissented, advocating for a quarter-point reduction. They argued that the labor market remains fragile and could benefit from additional monetary support.

However, the broader committee leaned cautious. Many officials warned that cutting rates prematurely could undermine credibility around the Fed’s 2% inflation target. Several participants even supported language acknowledging potential “upward adjustments” to rates — a clear signal that hikes remain on the table if price pressures persist.

The minutes emphasized that progress toward price stability could prove “slower and more uneven” than previously projected. That tone contrasts sharply with political pressure from Donald Trump, who has repeatedly pushed for lower borrowing costs. Trump has nominated former Fed governor Kevin Warsh to replace Jerome Powell, whose term ends in May — setting up a potential policy shift depending on leadership direction.

Adding complexity, the Fed’s preferred inflation gauge — the Personal Consumption Expenditures Price Index — is projected to re-accelerate in the coming months. If that materializes, expectations for mid-year rate cuts could be delayed further. Futures markets are currently pricing the first potential cut no earlier than June, with another possible move in the fall.

Bitcoin Reacts as Risk Appetite Wanes

Crypto markets responded immediately. Bitcoin slid from roughly $68,300 to below $66,500 during Asian trading hours, marking a 1.6% drop over 24 hours. The move accelerated as geopolitical tensions between the U.S. and Iran intensified, pushing oil prices up more than 4% and further weighing on risk assets.

Trading activity picked up as Asian markets reopened after the Lunar New Year break, amplifying volatility. Higher turnover and thin liquidity conditions compounded the selloff.

Despite the downturn, Coinbase CEO Brian Armstrong downplayed the weakness, suggesting the move was largely sentiment-driven rather than a deterioration in crypto fundamentals. He noted that Coinbase has been repurchasing shares and increasing Bitcoin holdings during the dip.

For now, Bitcoin and broader crypto markets appear caught between tightening monetary signals and geopolitical uncertainty. Until inflation data offers clearer direction — or policymakers provide stronger guidance on rate policy — volatility is likely to remain elevated.