5 min read- Bitcoin trades in a narrow range around 83k
- The Fed is expected to leave rates at 4.25% – 4.5%
- Attention will be on Powell, economic projections & the dot plot
- BTC is testing the 200 SMA, a key resistance level
Bitcoin continues to trade in a narrow range between 81k and 84.5k amid a cautious market mood ahead of the Federal Reserve interest rate session later today.
Volatility from previous weeks has calmed in recent days, both in the cryptocurrency market and for other risk assets such as US equities. However, demand for safe-haven Gold has continued to surge, pushing the precious metal to a fresh record high of $3035 earlier today, reinforcing its status as a safe-haven asset. On the other hand, Bitcoin continues to trade correlated to US stocks as a risk asset.
Investors are holding back from taking on big positions ahead of the upcoming Federal Reserve interest rate decision later today.
What to expect from the Fed?
The Fed is widely expected to leave interest rates unchanged at 4.25% to 4.5%, despite inflation easing to 2.8% and underlying inflation cooling to 3.1%, its lowest level since April 2021. The focus will be on Federal Reserve chair Jerome Powell’s comments, updated economic projections, and the dot plot, which maps out expected moves for interest rates over the coming months and years.
The Fed is likely to revise inflation slightly higher and modestly revise growth lower to reflect the expected impact of Trump’s trade tariffs on the US economy. Powell will likely maintain the hawkish stance amid concerns over inflation. However, he could also emphasise uncertainty surrounding the outlook, supporting a wait-and-see stance from the US central bank. The market is currently pricing in 60 basis points worth of rate cuts this year.
Despite investors expecting more rate cuts later this year, the crypto market has been under pressure amid rising concerns of an economic slowdown due to trade tensions. On April 2, Trump is set to announce global reciprocal tariffs, which, if they go ahead, could further weigh on the US economic outlook.
Heading into the meeting, Bitcoin’s Fear and Greed Index is at 34, showing Fear. Over the past week, the index has hovered around 30-40, dropping to extreme fear, a value of 24 on March 11.
Meanwhile, Bitcoin EFTs are showing modest inflows after shedding $5.5 billion in total over the past 5 weeks. Bitcoin’s price could see a recovery if inflows continue and intensify, which would reduce sell-side pressure.
BTC tests the 200 SMA resistance
Technically, Bitcoin is at a key junction. BTC is testing the 200 SMA resistance at 84.5k, which is also horizontal, making it a critical test. The bullish RSI divergence relating March 11 lo to 77k could be an encouraging trend reversal signal. Should buyers break and close above the 200 SMA, they could drive further gains towards 90k.
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