FOMC meeting this week: All eyes on Powell for rate hints and potential QT end, impacting crypto

• The Fed FOMC meeting will conclude on March 19th and is the final one before May. 
• Market participants expect the Fed to maintain the interest rates at 4.25%-4.50%.
• The Bank of Japan will also announce its interest rate decision on March 18th.

All eyes are on the Federal Open Market Committee (FOMC) as it wraps up its two-day meeting this Wednesday, March 19. This will be the final meeting until May this year. 

While markets widely expect the Federal Reserve to keep interest rates unchanged at 4.25%-4.50%, the real catalyst lies in what Fed Chair Jerome Powell says during the post-meeting press conference.

The Market’s Expectations

For traders like Michael and Esther, this is “the most important day of 2025.” They believe Powell’s words will shape market direction, with major implications for the S&P 500 (SPY) and broader risk assets, including crypto.

Currently, the SPY is trading below its 200-day simple moving average (SMA) at $572.55. If it fails to break above this level, further downside to $540 and possibly $520 remains likely. However, a rebound, could ignite a recovery across equities, including tech stocks that have seen significant corrections despite strong earnings.

How is This Connected to Trump’s Debt Plans?

Another crucial factor in play is President Donald Trump’s push to refinance US debt at lower interest rates. To achieve this, economic conditions would need to slow down, forcing inflation lower and justifying a Fed rate cut. Lower rates make debt more manageable, benefiting both the government and businesses. The market will be watching for any hints of this in Powell’s comments.

Meanwhile, the Bank of Japan (BoJ) will also announce its interest rate decision on March 18. With Japan’s economy slowing but inflation remaining persistent, uncertainty looms. If the BoJ unexpectedly hikes rates, markets could react negatively, especially on Wednesday morning.

Related: Rising U.S. Inflation Drives Fed Policy Shift as Bitcoin Rallies Toward a 98K Target

What Does This Mean for Crypto?

According to Polymarket, the probability of the Fed ending Quantitative Tightening (QT) before May has surged to 100%, a significant 50% increase in recent days. With over $407K in volume on the platform, traders believe the Fed is shifting gears faster than expected. If QT ends, the increased liquidity could potentially trigger a bullish wave across both stocks and crypto. 

The total crypto market cap currently stands at approximately $2.69 trillion. This follows a period of decline, but technical indicators suggest a potential rebound if liquidity improves.

Related: Bitcoin Price Takes a Hit as Investment Products See $430 Million Outflow After Fed’s ‘Hawkish’ Comments

The Relative Strength Index (RSI) reads 43.35 which means that the bears are overall in charge of the market’s trajectory. However, the gradient of the line suggests increasing bullish momentum. The MACD indicator has confirmed a bullish divergence on the daily chart with the MACD line (blue) crossing above the signal line (orange).