Key Points
- Bitcoin [BTC] maintains its $100K-$105K range ahead of the Federal Open Market Committee (FOMC) meeting.
- An unexpected interest rate cut could potentially drive BTC prices higher, according to a crypto research strategist.
Bitcoin [BTC] has successfully maintained its $100K position in anticipation of significant macroeconomic updates such as the Federal Reserve rate decision and PCE inflation data.
The market is currently not expecting any rate cuts, with interest traders pricing in a more than 99% chance of rate pause.
Impact of Potential Rate Cut on Bitcoin
Matt Mena, a cryptocurrency research strategist at 21 Shares, suggests that a surprise 25bps cut could potentially stimulate a market rally.
Mena states, “Given the recent turmoil in equities, the likelihood of a rate hike is effectively zero. However, a surprise 25bps cut could act as a major tailwind, sparking a rally across risk assets.”
The market will be closely observing the Federal Open Market Committee (FOMC), forward guidance, and Chair Jerome Powell’s press conference to predict the next market direction.
Effect of Trump’s Call and Inflation Concerns
President Donald Trump’s public call for interest rates to be dropped will make the forward guidance a crucial event to watch. Mena added that, “If the Fed signals two or more cuts, it could provide the kind of catalyst needed for Bitcoin to break above $110,000 and test the next key psychological levels at $125,000 and $150,000.”
The Fed has expressed concerns about inflation if the President’s extensive tariff program is put into effect. The PCE price index, the Fed’s preferred inflation data, will be released on January 31, a day after the Fed meeting.
The next 48 hours could cause market volatility as players adjust to the above announcements and data.
The Options market displayed a slightly bearish sentiment and hedging activity, as shown by a negative 25RR (25-Delta Risk Reversal) for the 30th of January expiry.
On the price chart, Bitcoin has stayed within the $100K-$105K range since January 17. It has remained above key short and long-term Moving Averages (MA), reinforcing a positive outlook.
However, a drop below the 50-day MA of $98K could speed up a decline to the range-low of $91K.
