Bitcoin Holds Its Breath as Fed Looks to Cut Rates

Bitcoin price’s recent rally yesterday ran into resistance just above $116,000, settling under $113,000 at the time of writing, as traders weigh broader macroeconomic signals ahead of today’s Federal Reserve announcement. 

The cryptocurrency market’s total capitalization has retreated 1.4% over the past 24 hours to $3.81 trillion, according to Bitcoin Magazine Pro data, even as U.S. equities continue to reach fresh highs.

Attention, both in the bitcoin and broader markets, is squarely on the Federal Open Market Committee (FOMC) rate decision coming later today, widely expected to deliver a 25-basis-point cut to the benchmark interest rate. 

Cooler-than-expected consumer price inflation last week and a slowing labor market have fueled expectations for this reduction, with markets seeming to be pricing in nearly two more cuts by year-end. 

Lower interest rates historically boost risk appetite, including demand for bitcoin, by reducing yields on cash and bonds and increasing liquidity in financial markets.

However, the immediate impact of today’s rate cut may be muted, as it may be already priced in. 

Investors will be scrutinizing Fed Chair Jerome Powell’s press conference for guidance on the future trajectory of monetary policy. 

A key question remains whether the Fed will signal an end to its Quantitative Tightening program, a dovish move that could inject further upside momentum into risk assets. Powell has previously indicated that the Fed is nearing this stage, though uncertainty from the ongoing government shutdown could cloud the outlook. If Quantitative Tightening ends, bitcoin should react positively.

Complicating matters, the U.S. labor market exhibits signs of weakness despite low unemployment, with average job search durations remaining historically long and hiring activity subdued. 

Inflation remains above the Fed’s 2% target, partly due to lingering tariffs. 

Institutional Bitcoin demand

Institutional demand for bitcoin remains supportive. BTC ETFs have recorded consistent net inflows, with $202.4 million added on Tuesday alone, reflecting growing confidence in the asset among professional investors. 

On the technical side, bitcoin continues to hold above a rising trendline dating back to May, with immediate resistance at $114,500 and support at $112,000.

A break above the former could target $120,000, while a slip below the latter may see a pullback toward $106,500.

As the Fed’s decision approaches, bitcoin remains at the crossroads of macroeconomic policy, technical positioning, and investor sentiment. 

At the time of writing, bitcoin is trading at $111,200.