Key Points
- Bitcoin’s price fluctuates as the market anticipates the U.S. Federal Reserve’s decision on interest rates.
- Bitcoin’s future direction could be influenced by Fed Chair Jerome Powell’s upcoming statement.
The price of Bitcoin, the leading cryptocurrency, is fluctuating near significant resistance levels. This is happening as global markets are waiting for the U.S. Federal Reserve’s decision on interest rates, which is expected to be announced later today. The economic uncertainty and ongoing inflation concerns have left traders feeling anxious.
The market is closely watching Fed Chair Jerome Powell’s forthcoming statement. This statement could potentially influence the direction of Bitcoin in the upcoming weeks.
Bitcoin’s Rise and the Anticipation for Powell’s Remarks
On May 7, Bitcoin’s value increased to $96,921.96, inching closer to the significant $100,000 threshold. This surge is happening as traders are preparing themselves for the Federal Open Market Committee (FOMC) announcement.
The market largely anticipates that the Fed will maintain the interest rates at 4.33%. However, the focus has now shifted to the tone and specifics of Chair Powell’s press conference scheduled for 2 P.M. EST.
It’s important to note that in recent months, Bitcoin’s reaction to macroeconomic data and central bank signals has grown, especially following the approval of spot Exchange-Traded Funds.
Institutional interest has increased, strengthening Bitcoin’s connection with traditional financial markets. As a result, updates on monetary policy now have a more significant impact on Bitcoin than ever before.
The U.S. economy showed signs of weakness in the first quarter of 2025, following a more robust finish in 2024. The Real GDP fell by 0.3%, and consumer spending slowed down significantly.
Meanwhile, inflation continues. The core Personal Consumption Expenditures (PCE) price index, which is a significant inflation measure for the Federal Reserve, rose to 3.5%, well beyond the central bank’s 2% target.
These figures put the Fed in a challenging position. While a slowing economy usually leads to a rate cut, rising inflation and new trade tariffs make it more difficult for the central bank to shift towards an easier policy. According to a CNBC Fed Survey, most economists believe that the Fed will eventually need to cut rates. However, Polymarket data currently indicates a 2% chance of a rate cut today.
Bitcoin and the Watch for Market Signals
Bitcoin’s next move could entirely depend on Powell’s tone. If the Fed acknowledges the economic weakness and signals a willingness to ease policy later in the year, Bitcoin could break above the $98,000 resistance and retest all-time highs. Some analysts believe it may push beyond $100,000 if dovish guidance and ETF flows align.
However, a more hawkish stance focusing on inflation risks could lead to a drop. Support is currently seen at the $92,000 to $94,000, with further downside possible if traders sell on disappointment. A neutral or vague statement could also cause price swings, especially given the thinner liquidity typical around Fed events.
In the meantime, two long-dormant Bitcoin wallets from 2013 recently transferred Bitcoin worth $325 million ahead of the Federal Reserve’s impending interest rate decision.
At present, traders are cautious. With Bitcoin at a crucial juncture and the Fed’s decision just hours away, the market is bracing for heightened volatility.
