Bitcoin Price Forecast: BTC slides below $88,000 as Fed holds rates, geopolitical risks cap recovery

Bitcoin slipped below $88,000 on Thursday, extending its decline amid the U.S. Federal Reserve's decision to keep interest rates unchanged. The Fed held the federal funds rate at 3.50%-3.75% during its latest meeting, a move that failed to provide a clear bullish catalyst for the crypto market.

Geopolitical tensions, particularly between the U.S. and Iran, further intensified risk-off sentiment. Renewed military posturing and economic uncertainty have led investors to shift capital away from risk assets, including cryptocurrencies.

Bitcoin spot ETFs also contributed to the downward pressure, with cumulative outflows reaching $1.19 billion in a week. BlackRock's Bitcoin ETF, IBIT, recorded $537 million in net outflows, reflecting institutional caution amid macroeconomic volatility.

Why Did This Happen?

The Fed's decision to maintain rates was expected by markets, with futures markets pricing in a near 100% chance of the 3.50%-3.75% range before the meeting. However, the lack of an explicit commitment to rate cuts in the near term has kept liquidity constraints in place. Some officials, according to the Fed's dot plot, still see the federal funds rate staying above 3% through the end of 2026.

Retail and institutional investors are also cautious about the macroeconomic outlook. Inflation remains above the Fed's 2% target, with both the CPI and PCE price index showing persistent inflationary pressures. Tariffs are seen as contributing to near-term inflation, adding to uncertainty about when the Fed might begin cutting rates.

How Did Markets React?

Solana (SOL), a major smart contract platform, is under pressure as well. The token is down 2% as of Thursday, with open interest in its derivatives market declining by 1.4% in the last 24 hours. Retail sentiment is bearish, with long liquidations of $5.55 million outpacing short liquidations of $1.34 million.

Technically, Solana is below key moving averages and faces a critical support level at $116. A break below that threshold could lead to further declines toward $100. The broader crypto market is also affected, with altcoins like Ethereum and XRP showing mixed performance amid ETF selling pressure.