The US Federal Reserve Open Market Committee (FOMC) interest rate decision on May 7 is anticipated to have a significant impact on risk-on assets, including cryptocurrencies, in India. While the consensus suggests no change in interest rates, Bitcoin (BTC) and altcoins could experience gains if the US Treasury is compelled to inject liquidity to prevent an economic recession. A more accommodative monetary policy could stimulate activity, but the Federal Reserve (Fed) is grappling with a weakening US dollar. Analysts suggest that a US interest rate cut may not spur growth as recession risks linger, creating a favorable environment for alternative hedge assets like cryptocurrencies. Economist and investor Jim Paulsen highlights that when Fed funds trade above a “neutral” interest rate, it historically signals a move toward recession or a “growth recession.” There is pressure on the Fed to lower interest rates, especially from US President Donald Trump. Concerns about overheated markets persist as US consumer inflation exceeds the 2% target, while April unemployment rates remain low, indicating no economic weakness. Market expectations indicate a possibility of interest rates at 4.0% or lower by September 17, with traders becoming less confident in the Fed’s monetary policy easing. Regardless of the FOMC’s decision, the recent Treasury bond purchase of $20.5 billion on May 5 signals intervention, which historically boosts cryptocurrencies, particularly as the US dollar trails other major currencies. The US Dollar Index (DXY) has dropped below 100 for the first time since July 2023, while gold has surged, favoring scarce assets like Bitcoin amid declining confidence in the US Treasury’s ability to manage debt. Although the likelihood of multiple rate cuts has decreased, the scenario remains favorable for cryptocurrencies, especially if the Fed expands its balance sheet, fueling inflation and devaluing fixed-income investments that support cryptocurrencies. This article provides general information and should not be considered legal or investment advice. The opinions expressed here are solely those of the author and do not necessarily align with Cointelegraph’s views.