Here’s what moved the crypto market today: FOMC Minutes, shifting CLARITY Act odds, and a renewed debate around prediction markets.
The interplay between macroeconomic policy and U.S. regulation once again set the tone for digital assets, sending Bitcoin and major altcoins lower while policy discussions around stablecoins and prediction markets intensified.
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Bitcoin slides as Fed Minutes crush March rate-cut hopes
Bitcoin extended its decline, logging a weekly loss of about 7% after the Federal Open Market Committee (FOMC) released its latest meeting minutes on 18 February.
The tone of the Minutes leaned mildly hawkish. Instead of signaling imminent monetary easing, the Fed effectively reinforced expectations that there would be no interest rate cut in March, confirming what markets had begun to price in: a “pause” on cuts rather than the start of a dovish cycle.
Data from rate futures showed that the probability of a March rate cut dropped to below 6%, a sharp comedown from the optimism seen at the start of the year. As investors adjusted to the idea of higher-for-longer rates, overall risk appetite faded. Bitcoin fell to an intraday low of around $65,800 on Wednesday, a steep retreat from Sunday’s local high of roughly $70,900-a 7% drop in just a few days.
This shift in sentiment spilled over to the wider crypto market, intensifying selling pressure and exacerbating already fragile confidence among traders.
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Fear grips the market as major altcoins deepen losses
The risk-off move was not limited to Bitcoin. Broader market indicators remained in a zone of “extreme fear,” reflecting negative sentiment across most digital assets.
– Ethereum (ETH) extended its weekly decline to around 10%, clinging precariously to the $2,000 support level.
– Solana (SOL) shed about 4% on the day and roughly 11% on the week, although it managed to hold above the key $80 price area.
– Ripple (XRP) was among the worst performers, plunging 15% since 15 February and slipping below the $1.50 mark.
The combination of macro headwinds, weaker liquidity, and elevated volatility has left traders cautious, with many reducing leverage and rotating into cash or stablecoins as they wait for clearer signals from both economic data and lawmakers.
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All eyes on PCE: the Fed’s preferred inflation gauge
With the March rate-cut narrative effectively on hold, market attention is now pivoting toward the Personal Consumption Expenditures (PCE) index due on Friday. This is the Fed’s favored inflation metric and often carries more weight than the more widely discussed CPI.
Two broad scenarios are on the table:
– Hotter-than-expected PCE:
A stronger inflation print would likely reinforce the Fed’s cautious stance, bolstering the case for keeping rates elevated for longer. That outcome could further weaken risk sentiment, pushing Bitcoin and altcoins lower as investors reprice the timing and magnitude of future cuts.
– Cooler-than-expected PCE:
Softer inflation data could provide short-term relief, encouraging a modest rebound over the weekend as traders regain some confidence that rate cuts, while delayed, are still on the horizon.
As a result, the upcoming PCE release has become a key near-term catalyst that could either deepen the current correction or trigger a relief rally in digital assets.
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Fed research gives prediction markets a powerful endorsement
Amid these macro developments, the Federal Reserve quietly delivered an important signal for a niche but fast-growing segment of the crypto-adjacent ecosystem: prediction markets.
A recent Fed study focused on Kalshi, the first fully regulated U.S. prediction market platform for macroeconomic outcomes such as inflation, unemployment, GDP, and Fed decisions. According to the research, Kalshi’s markets provide real-time insight into expectations, capturing how traders think major economic variables will evolve.
The Fed’s findings went even further, suggesting that in certain contexts, prediction markets can outperform traditional benchmarks like consensus forecasts on financial terminals that rely on periodic surveys. Unlike surveys, which are updated at fixed intervals and can lag behind evolving conditions, prediction markets continuously incorporate new information as participants buy and sell contracts.
The study concluded that prediction markets hold strong promise as a new standard for measuring expectations and can help inform monetary policy decisions. For an emerging sector that has often operated in regulatory gray zones, this reads as a strong vote of confidence from a key U.S. institution.
However, the report also highlighted an unresolved challenge: ongoing jurisdictional and oversight disputes between the Commodity Futures Trading Commission (CFTC) and various state-level regulators. Until regulatory clarity is fully achieved, the growth and innovation potential of prediction markets will remain constrained.
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Coinbase CEO: CLARITY Act could deliver a “win-win-win”
On the legislative front, stablecoins and banking relationships stayed in the spotlight. Coinbase CEO Brian Armstrong expressed optimism about the ongoing negotiations around the CLARITY Act, a key piece of legislation aimed at defining how stablecoins and related products are treated in the U.S. financial system.
In a recent televised interview, Armstrong described the current talks about stablecoin yields-a contentious issue for both banks and crypto-native platforms-as being on a constructive trajectory. He argued that policymakers, regulators, and industry leaders are moving closer to a framework that works for all sides.
In his words, market structure is “making great progress,” and he expects the final version of the CLARITY Act to result in a “win-win-win outcome”-benefiting consumers, the crypto industry, and traditional banking institutions alike. The goal is to establish clear rules for stablecoin rewards and interest-like features without stifling innovation or giving any one sector an unfair advantage.
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White House meetings and the political path of the CLARITY Act
To push the legislation forward, the White House has been holding a series of meetings with key stakeholders from both the crypto space and traditional finance. A third high-level meeting, scheduled for 19 February, is expected to focus specifically on compromises around stablecoin rewards and yield mechanisms-elements seen as crucial to unlocking broader bipartisan support.
Parallel to these discussions, lawmakers have been publicly weighing in on the bill’s prospects. During an event in Mar-a-Lago, Senator Bernie Moreno (R-OH) suggested that the CLARITY Act could be passed “hopefully by the end of April.” This forecast briefly boosted optimism among traders and political betting markets.
For a short time, odds on specialized prediction platforms for the Act’s passage soared to around 85%, before retreating sharply to about 55%. The volatility in those expectations underscores how sensitive markets remain to even incremental news on regulatory progress.
Moreno also stressed that the already-enacted GENIUS Act, a separate law concerning stablecoins, is not expected to be amended in ways that would tilt the playing field toward traditional banks. That assertion is intended to reassure crypto firms that new legislation will not be used to quietly undermine earlier pro-innovation rules.
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Why the CLARITY Act matters so much for crypto
The CLARITY Act has become a focal point because it sits at the intersection of three powerful forces: consumer protection, banking regulation, and crypto innovation.
If passed in a form close to what Armstrong and other industry advocates are supporting, the law could:
– Define how stablecoin issuers interact with banks, including where reserves can be held and how they are audited.
– Set rules for stablecoin yields, clarifying whether they are treated more like bank interest, securities, or a hybrid.
– Lower legal uncertainty for exchanges, custodians, and fintechs that want to integrate stablecoins into payment and savings products.
For everyday users, a clear framework could mean more transparent disclosures, safer custody practices, and a wider array of regulated, yield-bearing products. For institutions, it would provide a roadmap for entering or expanding within digital asset markets without constantly fearing abrupt regulatory reversals.
On the flip side, a restrictive version of the law could entrench incumbents, limit competition in stablecoin issuance, or push some innovation offshore. That is why negotiations around reward structures and banking access are so central to the current debate.
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Macro pressure meets regulatory uncertainty: what it means for investors
The events of the past 48 hours highlight how macro policy and regulation are now the two dominant drivers of crypto price action:
– From the macro side, the Fed’s reluctance to commit to near-term rate cuts has dented liquidity conditions and appetite for speculative assets.
– From the regulatory side, the outcome of the CLARITY Act and related stablecoin rules could reshape how capital flows into and through the digital asset ecosystem.
For traders and long-term investors alike, this environment calls for more than just technical chart analysis. Monitoring Fed communications, inflation data, and legislative milestones is becoming as critical as tracking on-chain metrics or protocol upgrades.
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Prediction markets as a bridge between policy and crypto
The Fed’s recognition of prediction markets speaks to another emerging theme: the convergence between crypto-native tools and traditional policy-making.
Many prediction markets are built on, or inspired by, blockchain infrastructure, using tokens and smart contracts to facilitate trading and settlement. If policymakers increasingly rely on these markets as one source of forward-looking information, it could:
– Strengthen the case for regulated, on-chain markets that offer transparent odds on macro events.
– Encourage development of hybrid platforms, blending regulated front-ends with decentralized back-ends.
– Expand opportunities for traders who specialize in event-driven strategies rather than pure technical or fundamental plays.
However, this potential can only be fully realized if regulators resolve jurisdictional disputes and establish stable, predictable rules for what kinds of contracts and markets are allowed.
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Short-term outlook: volatility around data and headlines
In the immediate term, crypto markets face a cluster of potential catalysts:
– The upcoming PCE inflation release could either reinforce or challenge the narrative of delayed rate cuts.
– Further Fed commentary may clarify how sensitive policymakers are to modest changes in inflation and employment data.
– Additional White House and congressional updates on the CLARITY Act could swing sentiment rapidly, especially for tokens tied to the stablecoin and exchange ecosystem.
With Bitcoin already under pressure and altcoins lagging, volatility may remain elevated. Traders should be prepared for sharp, news-driven moves in both directions as macro and regulatory narratives continue to evolve.
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Final note
Digital assets remain highly speculative and subject to rapid price fluctuations driven by macroeconomic data, central bank policy, and shifting regulatory expectations. Anyone considering trading, buying, or selling cryptocurrencies should treat them as high-risk investments and conduct thorough, independent research before making decisions.