Bitcoin traders are focusing on the upcoming Fed decision on interest rates and the dot plot, which could indicate future changes. Rates are likely to remain at 4.25%–4.50%, but any signals from Fed Chair Jerome Powell could lead to significant volatility.
Focus on the Dot Plot
The Federal Reserve is expected to keep interest rates unchanged in the 4.25%–4.50% range. The official decision will be announced on Wednesday at 2 p.m. EDT, followed by Fed Chair Jerome Powell’s press conference. However, the real intrigue lies in the dot plot, which shows where policymakers see interest rates heading in the coming months. If the dot plot signals fewer cuts than expected, it could strengthen the dollar and put pressure on Bitcoin and other risk assets.
Why Bitcoin Traders are Concerned
Bitcoin's price has already cooled after hitting highs above $100,000, and a hawkish Fed outlook could deepen that consolidation. XBTO, a crypto trading firm, notes that traders are bracing for volatility if the dot plot reflects less dovish expectations. According to analyst Matteo Greco from Fineqia, rate cut expectations for 2025 have already been slashed from 100 basis points to just 50, and could dip further to 25 basis points amid global tensions.
Long-Term Outlook for Bitcoin
Interestingly, a more aggressive Fed stance not only weighs on crypto in the short term but also adds long-term fuel. Higher rates increase U.S. debt servicing costs, worsening the fiscal outlook. This dynamic could enhance Bitcoin's role as a hedge alongside gold, especially as inflation and global uncertainty remain in focus. For now, traders will need to exercise patience until the dot plot and Powell's comments are revealed.
As the Fed’s expectations remain uncertain, the crypto community needs to be cautious, watching for any shifts that could influence Bitcoin's next move.
