Will Crypto Market Rally or Face Fed Shock?

The FOMC minutes from the January Fed meeting will be released on February 18, 2026. The Fed minutes are expected to influence the crypto market as traders assess whether policymakers lean hawkish or signal future rate cuts.

FOMC Minutes to Drive Crypto Market Reaction

In the case of the crypto market, the effect of the minutes depends on the degree to which they shift the expectations in the markets for interest rates. The effect is not so much driven by the wording of the minutes but is instead driven by the degree to which traders shift their expectations for rate cut projections.

If the minutes indicate that the Fed is becoming more comfortable with cutting rates or is concerned about slowing economic growth, then the expectations for rate cuts could rise even higher. 

However, if the minutes emphasize patience and upside risks to inflation, then the expectations for rate cuts could move even further out. This will likely put downward pressure on the Bitcoin price and other higher beta altcoins.

In an X post, analyst MANI sketched out two scenarios for crypto. A hawkish tone, indicating that rates may remain higher for longer, could prompt selling pressure in the digital asset space. A dovish message suggesting rate cuts are coming would help prices recover.

From the prior meeting, Chair Jerome Powell said there is “no rush to cut rates.” MANI cautioned that the release might raise volatility and urged market participants to be careful with risk. The next rate decision comes up on March 18.

Low Inflation Figures Strengthen the Case for Lower Rates

As CoinGape reported, CPI rose 2.4% YoY in January, lower than estimates of 2.5%. That was the lowest reading in more than four years, and it suggested that inflation is moving closer to the Fed’s 2% target.

Markets are pricing in about 2.5% rate cut for 2026, which is the biggest total since December 10 when the Fed met last, said analyst Liz Thomas. This forward-looking outlook holds even after stronger-than-expected employment and still-high supercore inflation, she added. Thomas said if growth remains strong and employment is sustained, expectations now are too dovish.

The federal funds rate remains between 3.5% and 3.75%. The central bank put the brakes on its easing cycle after various cuts towards the end of 2025. The January FOMC minutes will offer specifics on that internal debate over the pause and how officials perceive growth and inflation risks.

Market pricing swung significantly following the latest labor data. Ahead of the January jobs report, traders assigned roughly a 40% probability to a 25 basis point rate cut at the March meeting. CME’s FedWatch tool reflected those expectations. But with nonfarm payrolls rising by 130,000, the probability of a rate hold leapt to over 92%.

The employment report changed the tone around labor market expectations. Fortune cited Schwartz as saying the data “flipped the no hiring/no firing narrative” that many Fed watchers had adopted.