Ahead of the US Federal Reserve FOMC Meeting, the market is analyzing the impact of its latest move to resume bond purchases.

Over the past few weeks, Fed Chairman Jerome Powell has waded off pressures to lower interest rates at a time when pundits believe this move could revive the market.

The U.S. Federal Reserve has made its biggest 3-year bond purchase since 2021, injecting $20 billion daily, according to an X update by Money Guru Digital. The apex bank began buying bonds again as shown in the Treasury auction results.

The move comes ahead of the FOMC meeting on May 6, with speculations circulating on a possible interest rate cut.

However, this liquidity injection is a big statement from the Fed as it suggests the bank is responding to the lingering financial stress.

At the onset of the COVID-19 pandemic, the Fed began a similar capital injection plan to stabilize the market.

Key Takeaways From FOMC Meeting

Amid the U.S.-China trade war and changing market realities, Fed Chair Jerome Powell is taking a more cautious approach. Despite the tempered plan to stabilize the market, the exact policy update from tomorrow’s meeting can change the market trend.

Outside the FOMC meeting, Jerome Powell and U.S. President Donald Trump have different views on how to handle the economy.

As CoinGape reported earlier, President Trump urged the Fed to cut interest rates ahead of Wednesday’s meeting. The premise is that inflation is now under control. It stands at 2.39%, compared to 2.82% in March.

Despite the tariff war, this inflation is closer to the benchmark 2% annualized target set by the Federal Reserve. It remains to be seen what the Fed’s position is, but bond purchases might provide short-term relief for the financial market.

Key Implications for Bitcoin and Risk Assets

Risk-on assets like Bitcoin are known to react to FOMC meeting decisions. A lowered interest rate will make the yield on crypto assets more attractive to investors.

After an intense volatility earlier in the trading day, Bitcoin price has reclaimed the $95,000 mark amid a 1.3% rally.

Altcoins are also responding to the potential interest rate update tomorrow with Ethereum, XRP, and Solana paring off their daily losses.

Per an earlier BTC price review, the coin has a potential $100,000 breakout thesis. Irrespective of the direction of the Fed on Wednesday, a move that may also materialize if the Fed continues to inject liquidity into the market.