The crypto market is tense ahead of this Wednesday’s FOMC meeting, with significant speculation that the US Federal Reserve will keep interest rates steady. Analysts warn volatility is likely, with Bitcoin trading around $94,000. Jerome Powell’s press conference post-meeting is crucial, as traders fear a repeat of past market turmoil if his tone resembles previous hawkish pivots. A potential breakout is possible if a more dovish tone is struck.
The crypto market is tense as Bitcoin (BTC) braces for the upcoming FOMC meeting scheduled for this Wednesday. The Federal Open Market Committee, directed by Jerome Powell, will reveal its latest decision on interest rates, which is highly anticipated by both investors and traders alike.
According to the CME FedWatch Tool, there’s a towering 95.6% speculation that the US Federal Reserve will keep rates steady at 4.25% to 4.5%. This looming decision places significant focus on Powell’s subsequent press conference, where his tone could immensely influence market sentiment. A bullish sentiment would likely erupt if interest rates steeped at 3.5% manifests, as noted by the analysis from Bitcoinsensus.
Even with a high probability of rates stabilising, market volatility seems inevitable. Traders are noticeably taking a risk-off approach, which is reflected in Bitcoin’s current price, hovering around the $94,000 mark. ETF inflows are also slow to materialise, and there’s an uptick in liquidations, painting a picture of a challenging environment. Swissblock analysts describe this as a “battle” of resistance, with heightened short positions emerging from negative funding rates and increased open interest.
The $97,000 – $98,500 price zone is critical, according to Swissblock. They warn that if momentum instigates short liquidations, BTC could rally. Conversely, there’s also caution suggested against potential bear traps flipping into bull traps if market conviction dwindles. The upcoming FOMC meeting stands as a pivotal moment for other risk assets amid a backdrop of economic uncertainty, with historical data revealing that three out of the last five FOMC decisions have had bullish effects on Bitcoin.
However, current market sentiment is tinged with anxiety, particularly following softer GDP reports and ongoing trade war tensions. Veteran trader Mathew Dixon observes that expectations for a hold in June interest rates have shifted, further complicating the landscape.
Market nervousness ascends as traders recall December 2023 when Powell’s hawkish stance triggered a market “bloodbath.” Concerns linger among some traders about a potential repeat of those chaotic days. Trader Jim succinctly sums it up: “Bull markets don’t die of old age—they’re murdered by the Fed.” If Powell’s tone resembles December’s or fails to address concerns over GDP, the scenario may unfurl again similarly.
On another note, analysts like Michaël van de Poppe see developments in gold prices as signalling caution ahead of the meeting. He stated there’s still a risk-off mentality enveloping the market but remains optimistic about ETH’s potential ascent post-Wednesday.
Crypto Seth, another analyst, notes a surge in speculative activity as the price nears a local bottom. He pointed out that traders might be preparing for a move, possibly anticipating fluctuations leading up to the FOMC meeting this Wednesday.
Looking at the broader macroeconomic situation, there are points of contention like the ongoing US-China trade tensions affecting consumption and labour markets. Analysts assert this uncertainty presents risk not just for negotiations but for Trump as well, broadening its scope as a liability.
Despite the swirling turbulence, some foresee the potential for bullish momentum. If Jerome Powell hints at a dovish tone or potential rate cuts later this year, bulls could indeed gain traction. Arthur Hayes, the BitMEX co-founder, shared that a shift to quantitative easing could potentially send Bitcoin’s price skyrocketing.
On the other end of that spectrum, if the Fed’s message is staunchly hawkish, Bitcoin could revisit some recent lows. So, as the FOMC meeting approaches, market participants are carefully watching, conscious that Powell’s stance could sway the market’s balance significantly. Currently, Bitcoin stands at $94,474, experiencing a minor dip of 0.16% over the last 24 hours.
