Fed Keeps Rates at 3.5%-3.75% as Powell Era Winds Down; Bitcoin, Ethereum Slip on “Higher for Longer”

Markets didn’t get a pivot; they got a reminder that policy stability is not the same as certainty. The Federal Reserve left the target range unchanged at 3.5% to 3.75% for a third time this year, signaling patience as geopolitical tensions keep the inflation fight messy and, importantly, as a leadership handoff edges closer.

The committee’s statement pointed to elevated uncertainty tied to the Middle East, where disruptions have lifted energy costs: “Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook.” With ships still struggling to cross the Strait of Hormuz—through which roughly 20% of global oil moves—U.S. fuel prices have marched higher. The national average hit $4.22 per gallon on Wednesday, up 6.2% over the month, after hovering near $2.99 when the U.S.-Israel war with Iran broke out. That backdrop complicates any clean glide path back to 2% inflation.

Crypto traded the policy signal, not the headline. Around the decision, Bitcoin drifted near $75,100 and Ethereum near $2,240, both extending losses over the past 24 hours; BTC fell about 1.4% and ETH 2.3% per CoinGecko. As one trading executive put it, the near-term “higher for longer” read is a headwind, with Bitcoin slipping roughly 1.2% on the print—consistent with tighter liquidity remaining a short-run drag. Futures pricing implies little chance of relief through December, per CME FedWatch, so rate-sensitive flows are unlikely to turn supportive soon.

The more consequential development for risk assets may be governance, not basis points. This meeting was widely expected to be Jerome Powell’s last as chair, though he said afterward he will remain a voting FOMC member and transition to a governor role for a period “to be determined.” He framed the move amid “a series of legal attacks on the Fed which threaten our ability to conduct monetary policy without considering political factors,” which he said have been spearheaded by the Trump administration. He had also indicated he would serve as “chair pro tempore” if a successor isn’t confirmed by May 15, aiming to keep continuity.

Succession math tightened Wednesday. The Senate Banking Committee advanced Kevin Warsh’s nomination to lead the central bank, sending it to a full Senate where Republicans hold a majority. A procedural hurdle fell last week when the Justice Department ended its criminal investigation into Powell; Sen. Thom Tillis, who had called the case “bogus,” had vowed to block any Warsh vote until the probe closed. Warsh’s disclosures show a net worth near $100 million and exposure to several crypto-linked positions, including Solana and Polymarket. He has described many crypto projects as fraudulent or worthless, while voicing support for Bitcoin specifically. That profile suggests a chair who may differentiate sharply between BTC and the long tail of tokens—constructive for Bitcoin’s institutional narrative, tougher for speculative altcoin liquidity.

Inside the room, the committee remains divided. Fed Governor Stephen Miran again called for a 25 bp cut, while three governors backed holding but resisted language implying an easing bias. That lack of consensus dulls forward guidance and raises the risk premium investors demand when reading the dots, not unlike how miners and ETF desks demand wider bands when volatility clusters.

Here’s the trade-off for crypto in this setup: - Policy independence anxiety plus a leadership transition tends to lift macro uncertainty, which risk assets usually discount first. - Energy-led inflation pressure argues for patience on cuts, delaying the liquidity impulse that typically supports bid depth across BTC and ETH. - A potential chair who is pro-Bitcoin but skeptical of wide swaths of crypto could reinforce the ongoing dispersion: BTC dominance stable-to-higher while alt beta underperforms.

Until the growth-inflation mix or the personnel picture breaks cleaner, traders will likely continue to fade strength and buy stress in tight ranges, with ETF net flows and funding costs doing more of the talking than speeches. Clarity—on both policy path and who sets it—will matter as much as the next 25 basis points.