Key Insights
- Bitcoin is only just getting its strength back after a four-day losing streak from last week.
- This streak resulted from the crash in the US tech stock market after China released its DeepSeek AI.
- The FED is expected to make a decision on US interest rates on 29 January this week.
- According to the FED Watch tool, there is a 99.5% probability that the interest rates will stay relatively the same at the 4.25%-4.5% mark.
- Analysts believe that any unexpected move from the actual rate announcement could send Bitcoin soaring for rate cuts, or crashing for rate hikes.
The price of Bitcoin has been on a rollercoaster ride lately.
However, the cryptocurrency has bounced back to bullish territory after spending the previous four days in a losing streak.
This time around, with the Federal Reserve’s upcoming interest rate decision and the fallout from Nvidia’s stock drop still looming—Could Bitcoin be in for more turbulence?
The Full Story Of Why the Fed’s Decision Matters for Bitcoin
The Federal Reserve is expected to announce its interest rate decision this week on 29 January.
The FEDWatch tool suggests a 99.5% probability that interest rates will stay at the 4.25%-4.5% mark.
However, any unexpected move from the actual rate announcement (like a surprise rate cut for example) could send Bitcoin soaring, as pointed out by technical analyst, Ali Martinez.
The situation is so complex that even if the rates remain unchanged as the FEDWatch tool suggests, the real market driver will be the tone of the FED Chair, Jerome Powell.
If he so much as hints at future rate cuts or a softer approach to the interest rates, Bitcoin could see a bullish push to the upside.
However, if his stance remains hawkish, Bitcoin could be headed towards a period of harsh volatility that might take it further down.
Bitcoin’s Price Already “Priced In” the Fed’s Stance?
On the flip side, many analysts already believe that the market has already “priced in” the risk of unexpected changes.
In essence, any possible market volatility has already happened in the past.
The key focus now, is on Powell’s commentary. If Powell hints at cuts in the future due to issues like economic weakness or inflation, Bitcoin could be on its way to higher highs.
On the flip side, if he remains firm on keeping the rates high, Bitcoin could be headed for some short-term bearish sentiment.
In the event that this happens, investors should know that a break below the $100,000 mark could send Bitcoin towards the $94,000 zone where an untested “fair value gap” lives according to technical analyst Byzantine General.
Further losses could also push Bitcoin towards the $92,000-$88,900 range and spark a fresh new bearish phase on the short to medium terms.
What Does Donald Trump’s Presidency Have To Do With This?
It is interesting how this FOMC meeting is the first one under the Donald Trump administration (for the second term, at least).
Trump himself has already called for rate cuts because of the “declining oil prices” and the inflation issues.
Judging by this, analysts believe that Powell could be open to softening his stance, conpared to the December 2024 press conference.
If this happens, a Bitcoin rally could be knocking on the door.
Rally or Correction For Bitcoin?
According to the charts, Bitcoin recently dropped to its 50-day EMA somewhere around $98,000 when the DeepSeek/Nvidia stock drop happened on Monday.
This dip affected Bitcoin, the crypto market and tech stocks all over the US financial market.
However, CoinMarketCap data shows that the cryptocurrency has now rebounded above the $102,000 mark.
In the daily chart, the RSI shows a comeback of bullish action, especially with Bitcoin continuing to maintain its position above this EMA as shown.
With this being said, if we see a Bitcoin break below the $100,000 mark, the cryptocurrency would have broken below this EMA and might have a hard time reclaiming it.
This would be a prime recipe for a $90,000 revisit.
On the upside, if the momentum kicks into full gear, Bitcoin could push towards the $109,000 zone in the near term and get back on track to hit $150,000.
