Bitcoin Traders Await Fed Decision for Rate Cut Signals

Bitcoin traders are closely monitoring the Federal Reserve's upcoming rate decision, particularly focusing on the dot plot, a chart that could provide insights into future rate cuts. While the rate is anticipated to remain unchanged, the signals from Fed Chair Jerome Powell could significantly impact the market. Currently, Bitcoin is trading within a narrow range, with short sellers actively participating and large holders making discreet purchases.

With weak ETF flows and negative funding rates, most traders are adopting a cautious approach. However, if Powell hints at potential rate cuts, it could trigger a sharp upward movement in Bitcoin, potentially pushing it above $112,000. Conversely, a hawkish tone from Powell could send Bitcoin sliding back toward $100,000.

The Federal Reserve is expected to keep interest rates within the 4.25%–4.50% range. The official decision is scheduled for Wednesday at 2 p.m. EDT, followed by a press conference with Fed Chair Jerome Powell. While this decision is largely anticipated, the real focus is on the Fed’s dot plot, which shows the expected trajectory of interest rates over the coming months and years. If the dot plot indicates fewer rate cuts than anticipated, it could reinforce the narrative of higher interest rates for a longer period, strengthening the dollar and exerting downward pressure on Bitcoin and other risk assets.

Bitcoin’s price has already cooled after reaching highs above $100,000, and a hawkish outlook from the Fed could further deepen this consolidation. Traders are preparing for potential volatility if the dot plot reflects less dovish expectations. According to analyst Matteo Greco, expectations for 2025 rate cuts have already been reduced from 100 basis points to just 50, and could decrease further to 25 basis points if global tensions persist.

A more aggressive stance from the Fed not only weighs on crypto in the short term but also adds long-term fuel. Higher interest rates increase U.S. debt servicing costs, worsening the fiscal outlook. This dynamic could enhance Bitcoin’s role as a hedge alongside gold, especially as inflation and global uncertainty remain in focus. For now, patience is key. Until the dot plot and Powell’s comments are revealed, crypto markets are likely to remain cautious, watching for any shift that could either freeze or fire up Bitcoin’s next move.

Despite the current tight spot for Bitcoin prices due to various factors, a key metric highlighted by CryptoQuant suggests a potential significant move. According to analyst @oro_crypto, if Bitcoin continues to follow the typical growth pattern seen in the third year of its cycle, it could rise by around 120% in 2025. This indicates that, despite short-term volatility, the broader trend could still favor strong upside ahead.