The Federal Reserve's interest rate hikes or cuts significantly impact the cryptocurrency market. When rates rise, borrowing costs increase, reducing liquidity and risk appetite. Investors often shift from volatile assets like Bitcoin to safer options, causing crypto prices to drop. Higher rates also strengthen the U.S. dollar, pressuring crypto valuations further. Conversely, rate cuts lower borrowing costs, boosting liquidity and encouraging investment in riskier assets, including cryptocurrencies. This often fuels bullish trends, as seen in past cycles. However, the effect isn’t immediate—market sentiment, macroeconomic conditions, and regulatory news also play roles. For instance, aggressive rate hikes in 2022 triggered a crypto bear market, while anticipated cuts in 2023 sparked recovery hopes. Traders must monitor Fed signals closely, as crypto remains sensitive to monetary policy shifts.