Bitcoin Price – Bitcoin Struggles to Hold Gains as Fed Rate Decision Looms
Bitcoin Price – Bitcoin (BTC) has taken a breather, seeing selling pressure after Tuesday’s indecisive price action marked by a Doji candle. This classic market behavior appears to be a result of traders de-risking ahead of the Federal Reserve’s expected hawkish rate cut decision later today, Wednesday.
Bitcoin Price Action: A Doji Candle Signals Indecision
The leading cryptocurrency by market value traded at approximately $103,750, marking a 2% decline for the day, according to data from TradingView and CoinDesk. Bitcoin surged to a record high of over $108,000 on Tuesday but failed to hold those gains, closing the day flat in UTC time. This price action formed a Doji candlestick pattern, often seen as a sign of indecision. When a Doji appears at a record high, it can signal potential bullish exhaustion, suggesting that upward momentum may be running out of steam.
Despite Bitcoin’s recent decline, the broader cryptocurrency market has seen even more significant losses. Alternative cryptocurrencies have been hit harder, but major coins such as XRP, Solana (SOL), and Ethereum (ETH) are experiencing losses that are similar to Bitcoin’s drop.
The Fed’s Expected Rate Cut: Hawkish Outlook Looms
The Federal Reserve is expected to announce its rate decision and economic forecasts at 14:00 ET today, followed by a press conference from Fed Chair Jerome Powell at 14:30 ET. The consensus among analysts is that the Fed will reduce interest rates by 25 basis points, bringing the benchmark rate to the range of 4.25% to 4.5%. This rate cut would mark a total easing of 100 basis points since September.
However, the dot plot of future rate hikes and cuts is expected to show a more hawkish stance for 2025, with fewer rate cuts than previously anticipated. According to analysts at ING, the Fed is likely to signal only three rate cuts in 2025, down from the previously projected four. These analysts also predict 25 basis points of cuts per quarter in 2025, with a terminal rate of about 3.75% by the third quarter.
The Impact of Hawkish Expectations on the Crypto Market
The hawkish expectations surrounding the Fed’s future policy decisions are likely contributing to the de-risking taking place in the cryptocurrency market. Traders, having witnessed Bitcoin’s impressive rally from around $70,000 to over $100,000 in less than two months, are now looking for opportunities to take profits. The possibility of the Fed’s cautious approach to rate cuts could mean that the crypto market may be in for a short-term correction.
Although a smaller rate cut does not necessarily equate to tightening, the outlook for economic growth and inflation will likely remain uncertain. The market sentiment will be influenced by how the Fed revises its projections, with some analysts suggesting that inflationary pressures from areas like tariffs, wages, and labor costs could limit the extent of future rate cuts.
What’s Next for Bitcoin and Risk Assets?
Despite the current pullback in Bitcoin and other cryptocurrencies, the broader outlook for risk assets such as stocks and crypto remains tilted to the upside. The Fed’s stance on easing remains in play, and as inflation concerns remain persistent, the crypto market could benefit from further rate cuts in the longer term.
As of now, Bitcoin’s price is struggling to break through the $104,000 resistance level, and traders will be closely monitoring the Fed’s rate decision and economic projections for clues on the next move.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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