Key takeaways:
Bitcoin is finding it challenging to maintain its position above $115,000 following the Fed’s 25 BPS interest rate reduction.
The Fed indicated an additional 50 BPS of reductions anticipated through 2025.
Bitcoin futures open interest rose sharply, whereas spot volumes continued to decline.
Bitcoin (BTC) is attempting to stabilize its price above $115,000 after the U.S. Federal Reserve implemented a 25 basis point interest rate cut, bringing the benchmark range to 4.0%–4.25%. The crypto market’s immediate response has been subdued, as traders process the central bank’s cautious tone. BTC’s price momentarily fell below $115,000, and it is currently trying to close above this level in the hourly candle.
The Federal Open Market Committee (FOMC) statement on Wednesday indicates that job growth has slowed, unemployment has slightly increased, and inflation remains elevated. Importantly, the Fed has recognized that downside risks to employment have escalated, leaning the policy stance toward a more dovish approach.
New projections reveal that an additional 50 basis points of cuts are expected through 2025, highlighting the Fed’s growing apprehension about the risk balance. While the Committee reiterated its commitment to the 2% inflation target, the tone was more supportive of growth and employment amid slowing economic momentum.
A dissenting view came from newly appointed Fed governor Stephen Miran, who advocated for a deeper half-point cut, reinforcing the perception that the central bank is readying markets for a more accommodating future.
Notwithstanding the dovish signals, Bitcoin’s response has been tepid, with price consolidation dominating over directional movement. Traders appear hesitant, weighing the Fed’s long-term easing prospects against ongoing uncertainties in inflation trends and global markets.
Related: Federal Reserve expected to slash rates today, here’s how it may impact crypto
What’s next for Bitcoin in the short term?
Earlier, Cointelegraph noted that market analyst Nic Puckrin perceives the risk of the Fed’s rate cut already being factored into markets, potentially leading to a short-term “sell the news” effect. Though lower borrowing costs generally support risk assets over time, traders caution that initial optimism may dissipate quickly.
This indicates that Bitcoin and the wider crypto markets could experience short-term volatility, even as the longer-term outlook remains positive under a prolonged easing cycle.
Following the FOMC announcement, Bitcoin open interest surged, indicating that futures traders were positioning for increased volatility. However, spot market activity painted a different picture, with aggregated spot volumes continuing to decline while futures volumes surged.
This discrepancy implies that the current price actions are largely driven by leveraged positions rather than actual spot demand. Without a stronger presence of spot buyers, the sustainability of the move remains questionable, leaving the market exposed to sharp shifts if leveraged positions are unwound.
Related: Price predictions 9/17: BTC, ETH, XRP, BNB, SOL, DOGE, ADA, HYPE, LINK, SUI
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
