Bitcoin, altcoins, and other assets like stocks and bonds traded within a tight range on Wednesday as the market awaited the first interest rate decision of the year. Bitcoin ( BTC ) traded at $102,000, while popular altcoins like Ethereum ( ETH ), Ripple ( XRP ), and Solana ( SOL ) retreated by less than 5%. The top laggards were DeXe, Raydium, Jupiter, and Pudgy Penguins, which fell by double digits. Notable economists, including Mohammed El-Erian, expect the Federal Open Market Committee (FOMC) to leave interest rates unchanged at 4.50%. Today sees the first meeting of the year for the FOMC, the Federal Reserve’s top policy-making committee. Look for the Fed to keep interest rates as is and issue a largely unchanged statement. I suspect that Chair Powell’s goal for the press conference following the statement… — Mohamed A. El-Erian (@elerianm) January 29, 2025 You might also like: Bank of America says Fed should stop rate cuts —How will crypto react to Trump 2.0? A pause 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. Therefore, the initial rate decision will likely 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. The Fed expects inflation to stay elevated for longer, especially if Donald Trump moves ahead with his proposed import tariffs. Bitcoin and other risk assets, such as stocks, often decline when the Fed adopts a hawkish stance. Bitcoin price forms a risky pattern ahead of Fed BTC price chart | Source: crypto.news 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. Therefore, 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. Conversely, if Bitcoin jumps to a new all-time high, these altcoins may rebound. You might also like: Treasury yields and CPI data fuel market jitters before Fed’s next move
