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Bitcoin is consolidating around $94,000 as traders await the Federal Reserve’s decision on interest rates and Jerome Powell’s guidance.
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Despite a high probability of a rate hold, market volatility is expected, with analysts watching key price levels for breakout or breakdown opportunities.
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Powell’s tone at the FOMC press conference could trigger significant market movements, with analysts divided on the impact of his remarks.
Bitcoin (BTC) and the broader crypto market await Wednesday’s FOMC meeting and subsequent Jerome Powell press conference, poised for potential volatility.
Crypto Market on Edge as Bitcoin Awaits FOMC Verdict
According to data from the CME FedWatch Tool, market participants assign a 95.6% probability that the Fed will maintain rates at 4.25% – 4.5%. Accordingly, all eyes are on Fed Chair Jerome Powell’s tone and guidance during the upcoming conference.
“…if the 3.5% [now 4.4%] ends up playing out, the markets will have an insane positive reaction,” noted Bitcoinsensus.
Despite the high likelihood of the Fed holding interest rates steady, volatility remains a certainty. Traders have adopted a risk-off stance, with Bitcoin prices consolidating in the $94,000 range.
ETF (exchange-traded fund) inflows are also slowing, with rising liquidations reflecting the current sentiment. Analysts at Swissblock describe the situation as a “battle” of resistance, indicating negative funding rates and high open interest that suggest bears are intensifying short positions.
“The $97,000–$98,500 range is key. Momentum could trigger short liquidations, pushing BTC up. But beware: a bear trap might flip into a bull trap if conviction fades,” Swissblock warned.
This week’s FOMC meeting represents a critical moment for risk assets. Historical data indicates that three of the last five FOMC decisions resulted in bullish outcomes for Bitcoin; however, current uncertainties complicate the landscape.
The market is still digesting softer GDP prints, ongoing trade war tensions, and inflation concerns—particularly amid escalating rhetoric surrounding tariffs, which have muddied the issue of rate cuts for June.
“This Wednesday’s May FOMC meeting is expected to result in an interest rate hold, but June expectations have also shifted to a hold,” remarked veteran trader Mathew Dixon.
Powell’s Words May Trigger Bitcoin Breakout—or Breakdown
Such ambiguity is feeding market anxiety. In December 2023, Powell’s hawkish pivot incited significant sell-offs across risk markets, raising concerns among traders about a similar outcome.
“Bull markets don’t die of old age—they’re murdered by the Fed. If Powell’s tone echoes December’s bloodbath or overlooks negative GDP figures, markets could face a similar downturn,” stated trader Jim.
Concurrently, analysts like Michaël van de Poppe have noted gold’s recent rally as indicative of ongoing caution.
“We’re observing a risk-off mentality leading into the Fed meeting… Bitcoin’s build-up looks promising… we expect to see ETH rally following Wednesday,” he noted.
Another analyst, Crypto Seth, observed increasing degenerate trading activity as Bitcoin hovers at a local bottom around $94,000.
“Degens are positioning themselves for an anticipated movement. Market makers may look to push prices lower and take out long positions before a potential increase… expect volatility leading up to the FOMC,” he advised.
The broader macroeconomic backdrop remains unclear. Analysts reference unresolved US-China trade tensions and their repercussions on consumption, labor markets, and eventual political ramifications.
“Uncertainty has shifted to become a liability for Trump, rather than a negotiating tactic,” they clarified.
Despite prevailing fears, a breakout scenario remains plausible. Bulls could surge if Jerome Powell adopts a more dovish tone or alludes to future interest rate cuts. Arthur Hayes, co-founder and former CEO of BitMEX, highlighted the possibility of Bitcoin prices soaring if the Fed undertakes quantitative easing (QE).
However, a return to recent lows may ensue if the Fed emphasizes a hawkish stance. With the FOMC meeting on the horizon, the market walks a tightrope; all eyes are on Powell for direction.
As of writing, COINOTAG data shows Bitcoin trading at $94,474, reflecting a slight decline of 0.16% over the past 24 hours.
Conclusion
The current state of the crypto market is defined by cautious optimism and uncertainty. With the impending FOMC meeting, traders are bracing for potential volatility based on Powell’s insights. Market dynamics could shift rapidly, influencing Bitcoin’s trajectory for the days ahead. As traders and investors prepare, staying informed and vigilant will be essential.
