Bitcoin’s Price Outlook Hinges on Federal Reserve’s Policy Meeting: Here’s What to Watch

Bitcoin (BTC) is experiencing great volatility ahead of this week’s two-day session of the Federal Open Market Committee meeting.
BTC is struggling to stay above the $62,000 support after dropping below $65,000 at the start of the week.

Bitcoin (BTC) is struggling to maintain its recent bullish momentum. BTC has turned red in the past couple of days and is struggling to stay above $62,000 after losing nearly 15% in the last 7 days. The latest developments come ahead of a crucial meeting of the Federal Open Market Committee. This two-day event could have a significant impact on the digital asset’s price in the days and weeks to come.

In the past, the FOMC has led to high volatility in the market. At the time of writing, BTC is trading at $63,689 after a 1% positive change. For the most part, experts foresee a market rally that could end with BTC climbing back above $70,000.

However, prominent crypto analyst Michaël van de Poppe has warned that the world’s largest cryptocurrency could continue on the downward trend to retest $60,000. The analyst further warns that there could be little gain in pre-halving. The analyst notes:

Bitcoin has reached my area of interest. I don’t think we’ll go much lower, perhaps we’ll test $60K today around the FOMC and then we’ve defined the low for now. The chances of the pre-halving high to be in are significant too.

The chief economist at Moody’s Analytics, Mark Zandi, has shared his expectations for the upcoming meeting. “They’ll make it clear that they’re obviously not ready to cut rates. They need a few more data points to feel confident that inflation is heading back to target,” stated Zandin. “I expect them to reaffirm three rate cuts this year, so that would suggest the first rate cut would be in June.” He further opined.

Citigroup economist Andrew Hollenhorst said in a client note:

It only takes two individual dots moving higher to raise the 2024 median. Three dots are enough to push the long-run dot 25bp higher,

But the combination of inconclusive activity data and slowing year-on-year core inflation should be just enough to keep dots in place and [Fed Chair Jerome] Powell still guiding that the committee is on track to gain ‘greater confidence’ to cut policy rates this year.

Although BTC has struggled in recent days, the digital asset recently reached an all-time high of nearly $75,000 before retracing. Based on historic patterns, BTC undergoes a 30% correction after a huge rally. The drop has further coincided with a drop in ETF outflows. According to data from Farside investors, the collective outflows from all nine Bitcoin ETFs on Tuesday amounted to $326 million, marking more than double the outflows from the previous day. This has culminated in BTC hitting a two-week low, but investors remain confident of a rebound with the upcoming Bitcoin halving.

Bitcoin’s Price Outlook Hinges on Federal Reserve’s Policy Meeting: Here’s What to Watch

James M. Gathecha