29.01.2025 14:33
Bitcoin (BTC) is trying to stabilize around the level of $102,800 in the middle of the week after a four-day decline. The interest rate decision from the U.S. Federal Reserve (Fed), which will be announced during the day, will be decisive for the market direction. So, how will the Fed's interest rate decision affect Bitcoin? In our Bitcoin price prediction news...
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How does the Fed's interest rate decision affect Bitcoin?
Bitcoin is trading at $102,800 on Wednesday after a series of declines since Saturday. Market attention is focused on the Fed's interest rate decision.
FXStreet analyst Lallalit Srijandorn stated in his assessment, "The Fed's interest rate decision to be announced on Wednesday will be the focus of the markets. However, no change in interest rates is expected."
The analyst also noted that investors will closely follow Fed Chairman Jerome Powell's press conference, which could provide clues about the outlook for monetary policy.
If Fed officials adopt a cautious stance, the dollar may strengthen, and risky assets like Bitcoin could lose value.
Additionally, Shubh Varma, CEO and co-founder of Hyblock Capital, speaking to FXStreet, mentioned that one of the most important factors in terms of macroeconomic dynamics is Donald Trump's call for interest rate cuts.
Varma said, "Trump wants to force the Fed to lower rates to accelerate economic growth. However, this creates tension between him and Powell, who has taken a hawkish stance in December. The markets are trying to cope with this uncertainty. If rates fall too quickly, there are concerns that inflation could accelerate. This could affect traditional and digital assets, especially Bitcoin."
However, Varma added that as long as inflation remains controlled and economic growth continues, crypto assets like Bitcoin could be seen as a strong investment vehicle.
Bitcoin price prediction: Two scenarios on the table!
After dropping to the 50-day Exponential Moving Average (EMA) at $98,223 on Monday, Bitcoin rebounded and closed above $102,000. However, on Tuesday, the price declined again and is trading around $102,800 as of Wednesday.
If BTC falls below $100,000 and closes daily under the 50-day EMA, the decline could accelerate, and the price may drop to the next critical support level of $90,000.
Technical indicators are giving mixed signals. The Relative Strength Index (RSI) rose above 50 on Tuesday, indicating slight upward momentum. However, the Moving Average Convergence Divergence (MACD) indicator gave a sell signal on Tuesday, suggesting that a downward trend may begin.
On the other hand, if Bitcoin continues to recover, it could retest its all-time high of $109,588 reached on January 20.
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