The Outlook for Bitcoin Price Following Federal Reserve Announcement: Analyst Predictions
As Bitcoin continues to hold steady around the $100K mark in anticipation of crucial macroeconomic updates, all eyes are on the upcoming Federal Reserve rate decision and PCE inflation figures.
Market sentiment is leaning towards a scenario where interest rates remain unchanged, with traders assigning a high probability of a pause in rate adjustments.
Nevertheless, according to insights shared by Matt Mena, a crypto research strategist at 21 Shares, the market might witness a notable upsurge if there is an unforeseen 0.25% rate cut. Mena’s commentary suggests,
“Given the current market upheavals in the stock market, the chances of a rate increase are close to zero. However, a surprise rate cut of 0.25% could serve as a significant tailwind, triggering a positive movement across various risk assets.”
The attention of market participants will be concentrated on the Federal Open Market Committee (FOMC) meeting, the forward guidance provided, and the remarks expected from Chair Jerome Powell during the press briefing, all influencing the market’s trajectory.
Will FOMC Respond to Trump’s Plea?
President Donald Trump’s vocal demands for a reduction in interest rates will inject added interest into the forward guidance provided by the Fed. Mena emphasized that,
“A signal from the Fed indicating two or more rate cuts could serve as a potential trigger for Bitcoin to break past the $110,000 threshold towards targeting key psychological milestones at $125,000 and $150,000.”
The Federal Reserve has raised concerns over potential inflation stemming from the wide-ranging tariff initiatives proposed by the President.
The release of the Personal Consumption Expenditure (PCE) price index by January 31, a day post the Fed meeting, will play a crucial role in shaping market sentiment.
A PCE data report deviating from expectations could trigger either an upward surge in Bitcoin’s price or a significant decline.
Essentially, the forthcoming 48 hours are poised to introduce market volatility as traders adapt to the latest announcements and economic indicators.
Recent trends in the Options market point towards cautious sentiment and hedging strategies, demonstrated by a negative 25RR (25-Delta Risk Reversal) for the upcoming January 30 expiry date.
Comparatively, the 25RR portrayal was optimistic for the Friday Option expiration, portraying a preference for call options (optimistic positions). This indicates a slightly positive sentiment concerning the anticipated inflation figures.
Chart-wise, Bitcoin has maintained its position within the $100K to $105K range since January 17, remaining above essential short and long-term Moving Averages (MA) that reinforce a positive market outlook.
Nevertheless, a breach below the 50-day MA level of $98K could lead to an accelerated downtrend towards the lower end of the range at $91K.