Bitcoin and Altcoins Await Fed’s Interest Rate Decision

On Wednesday, the cryptocurrency market, including Bitcoin, altcoins, and other assets like stocks and bonds, traded within a tight range as investors awaited the first interest rate decision of the year by the Federal Open Market Committee (FOMC).

Bitcoin traded at $102,000, while popular altcoins like Ethereum, Ripple, and Solana retreated by less than 5%. The top laggards were DeXe, Raydium, Jupiter, and Pudgy Penguins, which fell by double digits.

Expectations from the FOMC Meeting

Notable economists, including Mohammed El-Erian, expect the FOMC to leave interest rates unchanged at 4.50%. El-Erian tweeted:

Look for the Fed to keep interest rates as is and issue a largely unchanged statement.

A pause in interest rate changes will not come as a surprise, as officials have hinted at it multiple times since the December meeting, when they cut rates by 0.25%. The accompanying dot plot pointed to just two cuts this year, down from the previous guidance of four.

Impact on Bitcoin and Altcoin Prices

The initial rate decision is likely to have little impact on Bitcoin and altcoin prices. Instead, Jerome Powell’s statement on what to expect later this year will be the main catalyst. Based on recent economic data, he is unlikely to change his stance on two rate cuts. Inflation remains stubbornly high, with the headline Consumer Price Index rising from 2.7% in November to 2.9% in December. Core inflation remained above 3%, exceeding the Fed’s 2% target.

Risks for Bitcoin and Altcoins

There is a risk that Bitcoin‘s price will drop after the FOMC decision, as it has formed a double-top pattern on the daily chart. This pattern consists of two twin peaks, which in this case are at $108,180. It also has a neckline at $88,913. Assets often experience a bearish breakout after forming a double-top pattern.

Another risk is that Bitcoin has formed a bearish divergence pattern on the daily chart. This is demonstrated by the Money Flow Index, Relative Strength Index, and MACD indicators, which have been declining since November.

A combination of a double-top pattern, bearish divergence, and a hawkish Fed suggests that Bitcoin may drop after the FOMC statement. Such a decline could push it down to the neckline at $88,913. A bearish breakdown in Bitcoin will likely lead to further downside for altcoins like Ethereum, Solana, and Polkadot.

Key Takeaways:

  • The FOMC is expected to leave interest rates unchanged at 4.50%.
  • Jerome Powell’s statement will be the main catalyst for Bitcoin and altcoin prices.
  • Inflation remains stubbornly high, which may lead to a hawkish Fed stance.
  • Bitcoin has formed a double-top pattern and bearish divergence, which may lead to a price drop.
  • A bearish breakdown in Bitcoin may lead to further downside for altcoins.

For more news and updates on the cryptocurrency market, visit Global Crypto News.

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