On Wednesday, Bitcoin traded above $77,000, with investors closely watching the Federal Reserve's decision. The market generally expects the Fed to hold rates steady, but if Fed Chair Jerome Powell emphasizes the message that “high rates will last longer,” it could still trigger market volatility.
According to The Block's price page, ahead of the Federal Open Market Committee (FOMC) meeting, Bitcoin (BTC) traded intraday between $75,689 and $77,837, with the latest price at approximately $77,100.
There is another reason why timing is important.
This is likely to be Powell’s final policy meeting as chair. His nominee, Kevin Warsh is expected to pass a key vote in the Senate Banking Committee and could be sworn in as chair on May 15.
The upcoming shift may require traders to analyze not only today’s decision but also the institutional framework that follows.
The market is tense and uneasy.
QCP Capital stated that the interest rate pause has already been priced in by the market; the real signal will come from Powell’s tone.
The company believes the market has shifted from trading geopolitical relief measures to trading macroeconomic uncertainty, with interest rate and foreign exchange markets showing stronger defensive undercurrents.
Bitunix analyst Chen Dean expressed the same view, but with more direct wording. He told The Block: “The market is no longer focused on whether the Fed will cut rates, but on whether the Fed will re-adopt the policy of ‘higher rates for longer.’”
Dean also believes that investors are now more concerned about the return of language indicating monetary tightening, rather than any immediate rate hikes.
For the cryptocurrency market, Bitcoin continues to benefit from inflows into risk assets and sustained demand for ETFs. However, if the Federal Reserve begins to signal the possibility of further rate hikes, both overvalued tech stocks and crypto assets could once again face liquidity tightening,” he noted. “The key variable in the short term is no longer the rate decision itself, but whether Powell is willing to reopen the door to tighter policy.”
This cautious attitude is evident in institutional fund flows.
On Tuesday, U.S. spot Bitcoin ETFs ended nine consecutive days of inflows just one day before the Federal Open Market Committee (FOMC) meeting. The subsequent meeting did not improve the situation.
SoSoValue data shows that on April 28, net outflows reached $89.68 million again, with BlackRock’s IBIT leading the day with $112 million in net outflows, while spot Ethereum ETFs lost an additional $21.8 million.
On-chain data has also become more sensitive. According to CryptoQuant analyst Woominkyu, the net inflow of Bitcoin to exchanges rose to 9,905 BTC on April 27, marking the largest single-day net inflow in 30 days, while exchange reserves increased from 2.666 million BTC on April 25 to 2.677 million BTC on April 28.
He warned that if these inflows of funds are not quickly absorbed, Bitcoin could retest the support zone between $74,000 and $75,000.
Macro image
These data points make today's macro backdrop even more impossible to ignore, with oil still at the center of the story.
Reuters reported this week that the United Arab Emirates will exit OPEC on May 1, a move analysts say could weaken the organization’s long-term control over supply and intensify future competition with Saudi Arabia for market share.
Bitunix believes this is less about current oil prices and more about the future structure of the energy market, as sustained strength in crude oil prices could perpetuate inflationary pressures and constrain any future monetary easing by the Federal Reserve.
Other analysts believe this could be one of the reasons why Bitcoin and the broader cryptocurrency market have struggled to achieve a sustained rally.
Simon-Peter Massabni, Head of Business Development at XS.com, said that as oil prices surged and global monetary caution intensified, bitcoin prices fell amid pressure on risk assets from a stronger dollar and heightened inflation concerns.
Kyle Rodda, Senior Market Analyst at Capital.com, added that Wall Street’s April rally is now facing one of the largest clusters of event risks this year, with potential risks ranging from central bank policies and tech company earnings to the situation in the Middle East.
Coinbase Second Quarter Outlook
Even so, the overall context for cryptocurrencies is not entirely weak.
Coinbase Institutional and Glassnode stated in their announcement that the market remains in a “wait-and-see” mode for the second-quarter outlook, with macroeconomic uncertainty currently outweighing most cryptocurrency-specific drivers.
However, the same report found that 75% of institutional investors and 61% of non-institutional investors still believe Bitcoin is undervalued. The report also noted that, despite an 18% decline in the overall cryptocurrency market, the supply of stablecoins increased from $308 billion to $318 billion in the first quarter, indicating that some funds remain within the cryptocurrency ecosystem rather than exiting entirely.
The report also noted a significant reduction in speculative activity. The amount of Bitcoin supply traded over the past three months declined by 37% in the first quarter, while the supply that had been idle for a long time slightly increased, suggesting that short-term traders may have been liquidated.
High risk
Wincent senior executive Paul Howard said that insufficient liquidity only increases the importance of the Fed's decision today.
He noted that both spot and perpetual contract trading volumes in March hit 12-month lows, meaning any unexpected signal from Powell could trigger extreme volatility, even if the initial reaction remains range-bound.
In other words, this makes Bitcoin’s situation difficult, but also highly instructive.
Bitcoin price is hovering above $77,000; although still well above recent lows, institutional inflows have cooled while exchange inflows have increased, and the market is waiting to see whether Powell’s final meeting as chair will shut the door on loose policy more firmly than traders hope.
“The current environment of low liquidity suggests that any unexpected signal from the Federal Open Market Committee (FOMC) could trigger significant market volatility,” Howard told The Block. “That said, based on historical patterns, my baseline expectation is that there won’t be a decisive breakout after the announcement, but rather range-bound trading between $72,000 and $80,000.”