Bitcoin Holds $94,000 as Traders Await Fed Rate Decision

Bitcoin and the broader crypto market are in a state of anticipation as they await the Federal Open Market Committee (FOMC) meeting scheduled for Wednesday. The US Federal Reserve is set to announce its latest interest rate decision during this meeting, with market participants assigning a 95.6% probability that the Fed will hold rates steady at 4.25% – 4.5%. This high likelihood of rate stability has shifted the focus to Fed Chair Jerome Powell’s tone and guidance during the subsequent press conference.

Despite the expectation of steady rates, volatility remains a near certainty. Traders have adopted a risk-off stance, with Bitcoin price consolidating in the $94,000 range. ETF inflows are slowing, and liquidations are rising, creating an atmosphere described as a “battle” of resistance. Negative funding rates and high open interest suggest that bears are intensifying short positions. The $97,000–$98,500 range is seen as key, with momentum potentially triggering short liquidations and pushing BTC up. However, there is a cautionary note that a bear trap might flip into a bull trap if conviction fades.

This week’s FOMC meeting is a pivotal moment for risk assets. Historical data shows that three of the last five FOMC decisions led to bullish outcomes for Bitcoin. However, this meeting comes amid heightened uncertainty, with the market still digesting softer GDP prints, ongoing trade tensions, and inflation worries. Veteran trader Mathew Dixon noted that the May FOMC meeting will likely result in an interest rate hold, but expectations for June have flipped to a hold as well.

Such ambiguity is feeding the market’s anxiety. In December 2023, Powell’s hawkish pivot sparked a “bloodbath” across risk markets, and some traders now fear a repeat. Analysts like Michaël van de Poppe see gold’s recent rally as a sign of prevailing caution, while another analyst, Crypto Seth, observed growing degen activity as the Bitcoin price forms a local bottom around $94,000. The broader macro backdrop is equally murky, with unresolved US-China trade tensions impacting consumption, labor markets, and ultimately, political outcomes.

Despite the swirling fears, a breakout remains on the table. Bulls could get the green light if Jerome Powell strikes a more dovish tone or hints at cuts later this year. According to BitMEX co-founder and former CEO, Arthur Hayes, the Fed switching to quantitative easing (QE) could see Bitcoin price go parabolic. However, Bitcoin could revisit recent lows in a sharp unwind if the Fed doubles down on hawkishness. Ahead of the Wednesday FOMC meeting, the market is walking a tightrope, and all eyes are on Powell to decide which way it tips.