Bitcoin Traders Await Fed's Powell for Rate Cuts Hints

Bitcoin traders are closely monitoring the Federal Reserve's upcoming decisions, particularly focusing on the dot plot, a chart that provides insights into future interest rate movements. While the interest rate is widely expected to remain unchanged within the 4.25%–4.50% range, the real impact will come from Fed Chair Jerome Powell's signals during his press conference. Bitcoin's price has been in a tight range, with short sellers active and large holders quietly accumulating.

ETF flows are weak, and funding rates are negative, leading most traders to adopt a cautious approach. However, if Powell hints at potential rate cuts, it could trigger a sharp upward movement in Bitcoin, possibly pushing it above $112,000. Conversely, a hawkish tone from Powell could send Bitcoin sliding back toward $100,000. The dot plot, which shows where each policymaker sees interest rates heading, will be crucial. If it signals fewer rate cuts than expected, it could reinforce the "higher for longer" narrative, strengthening the dollar and putting downward pressure on Bitcoin and other risk assets.

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

A more aggressive Fed stance not only weighs on crypto in the short term but also adds long-term fuel. Higher 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.

Technically, CryptoQuant highlights a key Bitcoin metric that may signal its next big move. 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 suggests that, despite short-term volatility, the broader trend could still favor strong upside ahead. The crypto market is on edge as it awaits Federal Reserve Chair Jerome Powell's speech following the Federal Open Market Committee (FOMC) meeting. While no rate cut is anticipated, the market is hopeful that a dovish tone from Powell could spark a significant rally. Powell's comments on rate pause and forward guidance are highly anticipated, as they could provide insights into the Fed's future monetary policy.

Analysts have suggested that potential rate cuts by the Fed could fuel a massive crypto rally, with some predicting that Bitcoin could reach as high as $197,000. This optimism is driven by the belief that lower interest rates could make riskier assets like cryptocurrencies more attractive to investors. However, it is important to note that these predictions are based on analyst forecasts and not guaranteed outcomes. The crypto community is closely monitoring Powell's speech for any indications of a shift in the Fed's stance on monetary policy. A dovish tone could signal that the Fed is considering easing monetary policy in the future, which could boost investor confidence and drive up the prices of cryptocurrencies. Conversely, a hawkish tone could dampen market sentiment and lead to a sell-off in crypto assets.