The Bitcoin and crypto market could receive a boost in confidence following the Federal Reserve’s close-door meeting today.

For context, the U.S. Federal Reserve is holding a closed-door meeting today, April 7, 2025, to review the discount rates charged by Federal Reserve Banks. Though the meeting was scheduled in advance and is not a direct response to the recent financial market turmoil, investors have now taken an interest.

Federal Reserve Meeting Amid Bitcoin and Market Downturn

It is important to note that the Federal Reserve is not expected to decide on interest rate cuts within this meeting. However, the reason behind investor interest is that the outcome of this meeting could hint at how the Fed might approach interest rates at the next Federal Open Market Committee (FOMC) meeting scheduled for May 6 to 7, 2025.

With the financial markets rattled by President Donald Trump’s sweeping tariff announcement, Bitcoin and the broader crypto market have entered a steep downtrend. The sudden imposition of tariffs, seen by analysts as a protectionist shock to the global economy, has led to a flight from risk assets. 

Major U.S. indices have reacted sharply, with the Dow Jones falling nearly 4,000 points over two days and the S&P 500 sliding into bear market territory. The tech-heavy Nasdaq has recorded a near 19% drop year-to-date.

Bitcoin has not escaped. At the time of writing, it trades around $78,016, down over 5.35% in the past 24 hours, with intraday lows near $74,500. Ethereum is seeing even steeper losses, falling more than 10% to around $1,548. The altcoin market mirrors the sentiment, with tokens like XRP sliding to five-month lows.

Could The Federal Reserve Effect Interest Rate Cuts Next Month?

However, there may be a change in policy winds that could benefit crypto assets. As The Crypto Basic confirmed today, JPMorgan’s global head of fixed income, Bob Michele, recently discussed this during a Bloomberg interview.

He noted that last week’s twin-day crash on Thursday and Friday was the fourth of its kind in American history, placing it in the same league as the crashes of 1987, 2008, and 2020. In each of those historical precedents, the Federal Reserve stepped in with aggressive interest rate cuts.

Michele believes the current market conditions are far from normal and argues that the Fed may need to act more urgently than it currently signals. While Chair Jerome Powell has been cautious, voices like Michele’s are pushing the narrative that an early rate cut may be necessary.

If the Federal Reserve’s decisions in today’s closed-door session does hint at interest rate cuts next month, this could boost investor confidence, possibly contributing to a recovery from the latest bloodbath. 

Jack Dorsey, CEO of Block and founder of Twitter, argues that Bitcoin risks becoming obsolete if its role remains limited to being a digital store of value. 

Speaking during an appearance at the Presidio Bitcoin event, he emphasized that survival depends on Bitcoin evolving into a widely adopted medium of exchange. 

According to Dorsey, if Bitcoin continues to serve primarily as a long-term investment tool, it may fail to sustain its relevance in the broader economy.

Caution on Over-Reliance on Store of Value Narrative

During his remarks, Dorsey noted that treating Bitcoin solely as a reserve asset may hinder its long-term potential. He argued that the tendency to “hodl,” or hold Bitcoin for value appreciation during economic uncertainty, limits the currency’s role in everyday life. 

In his view, this narrow use case could eventually push Bitcoin to the margins of financial systems. To illustrate a different trajectory, Dorsey pointed to practical, grassroots-level usage emerging in regions often underserved by traditional finance.

In parts of Africa, Central America, and South America, communities are reportedly integrating Bitcoin into routine transactions. Individuals in these regions are using Bitcoin for everyday needs such as paying for meals, coffee, and services. 

Dorsey noted that many of these users focus on Bitcoin’s functionality as money rather than its market value, signaling what he believes could be a critical use case.

Push for Broader Network Innovation

Dorsey also challenged the Bitcoin community to pursue innovation beyond existing second-layer solutions. Referring specifically to the Lightning Network, he argued that relying on a single method to scale transactions may limit growth. 

Instead, he called for expanded experimentation with alternative solutions that could bolster speed and privacy while simplifying the payment experience.

He stated that the Bitcoin ecosystem has not yet realized the original vision of peer-to-peer electronic cash. According to him, achieving that goal would require building more accessible tools that can compete with conventional payment networks like Visa and Mastercard. He urged developers to create systems that prioritize real-world use, especially in commerce.

Derivatives Market Reacts to Sharp Bitcoin Price Drop

This news comes at a time when the market responded sharply to Bitcoin’s recent price downturn. Notably, Bitcoin has plummeted by 8.10% in the last 24 hours and 6.73% in the past 7 days.  According to recent data, derivatives trading volume rose by 183.58%, reaching $183.10 billion. 

Options trading activity also surged, with volume climbing 327.28% to $5.11 billion. This increased market volatility has triggered widespread liquidations, with total losses reaching $467.60 million over the past 24 hours.

The possibility of a sooner-than-expected interest rate cut in the United States has escalated, with assets like Bitcoin as potential beneficiaries.

The global market has been crashing extensively since President Donald Trump’s April 3 reciprocal tariff announcement. It started with the US stocks recording their worst two-day performance since the 2020 COVID-19 plummet.

Meanwhile, at the start of the Asian market on Monday, China’s stock market crashed by over 5%, its largest single-day outflow since 2008. British and German markets also receded massively, as uncertainties resonated around the global market.

While investors quiver, there might be a silver lining, especially for the American market. JPMorgan’s global head of fixed income, Bob Michele, has suggested a possible early interest rate cut from the US Federal Reserve System (Fed).

The Fed Will Cut Rate Despite Chair’s Tough Talk: JPMorgan

Speaking at a Bloomberg appearance, Michele noted that it does not seem like business as usual in the US stock market, a view Fed Chair Jerome Powell seems unwilling to accept. The JPMorgan executive highlighted that last week’s Thursday and Friday crashes have happened only four times in America’s history.

The first three occasions were the 1987 stock market crash, the 2008 global financial crisis, and the 2020 lockdown. Interestingly, he stated that the US central bank immediately stepped in and slashed funding rates in all three events.

As a result, Michele expects the Fed to take a similar approach following last week’s steep market decline. The expert suggested that against Powell’s tough talk on Friday, the central bank may not last until its next FOMC meeting in May before it “sizably” cuts rates.

Meanwhile, the Fed chair took a circumspect approach in a Friday meeting at Arlington, Virginia, stating that the agency would not be in a hurry to cut rates. He noted that the central bank would observe the extent of the tariff impact and decide what to do next in relation to its inflation goals.

Notably, Michele is not alone in his call for an imminent rate cut; Trump had earlier nudged the Fed to slash funding rates. The pro-Bitcoin president noted that the central bank would be “better off” taking the approach.

Impact of Interest Rate Slash on Bitcoin’s Price

The pioneering cryptocurrency has corrected a staggering 8% in the past two days, imploding in the face of the burgeoning global market’s sideways trend. Nonetheless, quantitative easing would positively impact its price considerably.

Interest rate cuts reduce the cost of borrowing, encouraging investors to amass more capital through debt instruments. This, in turn, increases appetite to dabble in a broader range of investment vehicles, including cryptocurrencies.

Applying simple economics, growing demand at a constant supply would spur a surge in Bitcoin’s price. This simple analogy has historically fueled a Bitcoin price outburst, as seen in September and December 2024, when the Fed last slashed interest rates.

Meanwhile, BitMEX co-founder Arthur Hayes shares a similar sentiment, noting that the imminent funding rate slash would initiate a Bitcoin parabolic expansion, with $250,000 its target before the year’s end.