Will the Fed Hold or Hike? How Bitcoin Could React

Cryptocurrency markets are high-risk, and you should conduct thorough research before making any investment decision. This article is for educational purposes only and does not constitute financial advice.

This week's market focus is on the upcoming Federal Open Market Committee (FOMC) meeting. The interest rate decision will directly affect risk assets, especially Bitcoin, as the market closely watches policy signals and the Fed Chair's post-meeting remarks.

FOMC Meeting and Interest Rate Outlook

The current benchmark rate stands at 3.75%. According to market expectations, the probability of holding rates steady at this meeting is about 70%, a rate hike about 30%, and a rate cut extremely low at only about 1%.

The Fed Chair's remarks (Kevin Warsh was mentioned in the original draft) will be closely watched. President Trump has publicly called for rate cuts, but the Fed has historically maintained policy independence, and the Chair typically does not bow to political rhetoric. If the Fed holds rates steady at this meeting, the market may continue its current choppy pattern; if it unexpectedly hikes, risk assets could face a sharp decline.

The decision will be announced at 12:00 midnight Bangladesh time and 11:30 PM India time, followed by a press conference by the Fed Chair. If the remarks hint at possible future rate hikes—especially if inflation data keeps trending higher—the market could face more selling pressure; if the signals are neutral or dovish, a short-term rebound may follow.

In addition, there is no FOMC meeting in August; the next meeting is in September, when the Fed will assess inflation pressures using July CPI and labor market data (expected to be released August 10-12). If inflation picks up, expectations for a September rate hike could rise.

Bitcoin's Recent Price Action

Bitcoin is currently trading around $64,300. The previous day, the US market open triggered significant capital flows, with roughly $600 billion flooding in at one point before quickly reversing. Bitcoin fell rapidly from the $65,600–$65,800 area to near $62,600, before staging a modest recovery.

On short-term charts, Bitcoin remains in a downtrend. To reverse the weakness and turn bullish, the price needs to reclaim and close above $66,700, which has not happened yet.

Key Price Levels and Trading Strategies

Volatility tends to increase around FOMC meetings, and large traders may use news flow to manipulate prices in the short term. Therefore, retail investors should trade cautiously and avoid entering positions blindly ahead of major events.

If Bitcoin rebounds, resistance levels to watch on the upside are the $65,300–$65,400 area, followed by $65,800 and $66,400. If the price first drops to around $62,600 or lower and then rebounds on positive FOMC news, it could provide a better long opportunity. Conversely, if the price has already rallied above $65,000 before the meeting, the risk of a post-meeting pullback increases.

Ethereum Shows Relative Strength

Compared to Bitcoin, Ethereum has shown stronger capital flows recently. Data shows that yesterday Ethereum saw net buying of about $9.4 million, while Bitcoin saw net selling of about $49 million. The day before, Bitcoin had net outflows of about $11 million, while Ethereum still recorded positive inflows. On the 27th, Ethereum also saw positive inflows of about $11 million.

If the market shakes off the FOMC influence and resumes its uptrend, Ethereum breaking above the key resistance corresponding to $66,800 could lift sentiment across the entire altcoin market. However, investors still need to track whether inflows can be sustained.

Portfolio and Risk Warning

Long-term investors may consider making Bitcoin a core holding, with a suggested allocation of 50%–60%, Ethereum around 30%, and other altcoins on the sidelines for now. Once the market trend becomes clearer, adjust positions gradually.

Again, this article is based solely on public information and market data analysis, and does not constitute buy or sell advice. Investors should make independent decisions based on their own risk tolerance and practice sound position management.