Crypto market observers had widely expected the U.S. central bank not to raise the interest rate and that digital asset prices would not move much.

The Federal Reserve and bitcoin fulfilled expectations on Wednesday with the U.S. central bank leaving the Federal funds rate unchanged and the largest cryptocurrency by market capitalization remaining at its recent level above $27,000.

“The Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent,” the Fed said in a statement. “The Committee will continue to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time.”

Bitcoin was recently trading at about $26,945, down 0.8% over the past 24 hours. BTC has risen roughly 8% over the past 10 days amid a slight uptick in investor optimism about the Chinese economy and the Fed’s expected, more dovish tilt. The central bank’s drumbeat of monetary tightening over the past 18 months sent crypto and other asset markets spinning, drawing harsh criticism as an overstep that might doom the U.S. economy to severe recession.

In an email to Unchained, Brian D. Evans, the CEO and founder of digital asset and AI-focused venture firm BDE Ventures, wrote that the Fed’s decision had relieved pressure on bitcoin and other digital assets.

“We didn’t see an immediate and pronounced bounce because this decision was largely priced in, and I suspect that the broader crypto market will continue to chop sideways for a long time to come,” Evans wrote.

He added: “There is no immediate catalyst in the offing for a sustained rally for Bitcoin and the rest of the digital asset market. Maybe if we get these proposed Bitcoin ETFs approved, we could see a serious surge. But it looks increasingly likely that such an approval might get pushed out to next year.”

“Most investors are cautious right now and, if anything, gradually accumulating,” Evans wrote.

Mark Connors, head of research for Canadian crypto asset manager 3iQ, struck a more optimistic note, writing to Unchained that the Fed’s dovish turn “should lift all digital assets,” although he added that other factors, including recently, favorable court decisions and bitcoin’s 2024 halving will likely have a bigger say in the possibility of a longer, stronger rally.

“BTC price remains channeled despite the focus on retaking $27K,” Connors wrote. “We see the combination of the current tight price channel and favorable judicial opinions (GBTC, XRP court decisions) as coiling the price spring of BTC as we approach April 2024’s halving.”

‘A long way to go:’ Powell

With inflation cooling from a torrid 9% last summer to under 4%, the Fed has been able to ratchet back its monetary aggressiveness, leaving the interest rate at a standstill in two of its last two meetings. The Fed had previously raised the interest rate 525 basis points since March 2022,

In comments following the Fed decision, Fed Chair Jerome Powell left open the possibility of resuming rate hikes in upcoming meetings as it looks to meet its goal of reducing inflation on an annual basis to 2%. “The process of getting inflation down to 2% has a long way to go,” Powell said. “FOMC decided to hold in light of how far we’ve come.”

Powell added that “Fed projections are not a plan” and that “policy will adjust as appropriate.”

“We will make decisions meeting by meeting,” he said, noting to a reporter’s question that “there will need to be some softening in the labor market.”

Powell’s caution dovetailed with previous remarks that the bank’s monetary policy decisions would be “data-dependent.”

Meanwhile, wider crypto investor reaction was muted as it has mostly been after recent Fed rate hike announcements.

Ether was recently changing hands at $1,617, a 1.6% decline from Tuesday, same time. The second largest crypto in market value has mostly mirrored BTC, rising more than 6% from last Monday.  Other major cryptos were mixed following the Fed’s decision with SOL, the token of Solana, maintaining some of its early gains but Cardano’s ADA remained slightly in the red.

“Regarding ETH, the growing commitment to staking by more investors may prove even more eventful when the Fed eventually pivots,” Connors wrote.

UPDATE (September 20, 2023, 18:56 UTC): Adds Powell comments and some price information.

UPDATE (September 20, 2023, 19:42 UTC): Adds Evans comments, updates headline, price information.