Bitcoin traders are closely monitoring today's Federal Reserve announcement. The FOMC is expected to cut interest rates by 0.25%, with a target range of 3.5% to 3.75%. Interest rate cuts often boost risk assets such as Bitcoin, but the market has a history of volatile swings on the day of the FOMC meeting.
Expected volatility before and after the announcement
This week is a typical FOMC week. Traders often warn that the pre-FOMC rally could turn into a trap. The strength seems real, but the timing is risky. Rapid pumps and sudden reversals are common when the Fed provides forward guidance.
Bitcoin rebounds due to extreme fear
Earlier this week, the Crypto Fear Index dropped to 10, indicating extreme fear in the market. Bitcoin then rebounded from $86,700 and headed towards $92,300. The price is currently forming a higher base of support, giving bulls momentum ahead of the announcement.
Analysts expect the price to reach $103,000 if it breaks through the resistance level.
One analyst said that Bitcoin is heading towards a key resistance level near $94,200. Analysts expect a clean breakout followed by a retest of support that could pave the way to $103,000.
Strong divergence could push Bitcoin closer to $100,000
Analyst Michael van de Poppe noted that Bitcoin is lagging compared to the Nasdaq, even though it is typically correlated with the latter. While tech stocks and other high-beta assets have already recovered losses from the recent market crash, Bitcoin has not yet recovered.
This could lead to mispricing and push Bitcoin higher, he said. He also argued that the recent fall from $115,000 to $80,000 was so rapid that widespread risk-on appetite is returning.
Short-term goal: $94,000 break. Mid-term goal: $110,000-115,000
If the FOMC cuts interest rates and signals further easing, Bitcoin could retest $94,000 and break through higher levels, potentially heading into the $100,000-$103,000 region.
Experts expect Bitcoin to return to the $110,000-$115,000 range in the coming weeks and the entire correction will disappear.
