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Bitcoin Drops 5% as Traders Eye Fed Rate Decision

Coin WorldSunday, May 4, 2025 10:21 am ET

1min read

Bitcoin (BTC) experienced a decline towards $95,000 as the May 4 weekly close approached, with traders anticipating further macro-induced downside movements. The cryptocurrency retreated from its multimonth highs, creating a volatile environment as market participants discussed key price levels. Popular trader TheKingfisher noted that there were dense clusters of long positions around $95,700 to $96,000 and heavy short positions around $96,500 to $97,000, indicating potential price magnets that could cause volatility as they are tested.

Data from monitoring resource CoinGlass showed that the price collided with buy liquidity, with the majority of asks clustered around $97,200. This liquidity grab behavior had been observed multiple times in the past week, leading some to speculate that it could continue as the $100,000 mark approached. Popular trader BitBull summarized that positions from $94,000 to $97,000 were flushed over the weekend, suggesting a potential for a fresh dip.

Crypto trader, analyst, and entrepreneur Michaël van de Poppe assessed the potential for a fresh dip, stating that BTC/USD had plenty of room to retest support while still maintaining its recent comeback. He expressed a preference for BTC to hold above $91,500 to $92,000, which would validate the continuation towards a new all-time high as the previous range support becomes support again.

Expectations of volatility were high heading into the new week, with the US Federal Reserve due to decide on interest rates. The stakes for market sentiment were high before the event, with recession warnings and pressure from President Donald Trump combining with hawkish signals from Fed officials. The latest data from CME Group’s FedWatch Tool maintained minimal odds of a rate cut on May 7, but Van de Poppe commented that cryptocurrencies and altcoins have the tendency to correct in the week prior to the Fed meeting, suspecting that the end of that correction would be around Tuesday and that prices would go up from there.

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