Bitcoin is currently trading above the $115,000 threshold as markets prepare for tomorrow’s pivotal announcement from the US Federal Reserve. This week is set to be crucial, as the outcome of the Fed’s meeting will clarify the macroeconomic landscape, affecting the prospects for risk assets, including cryptocurrencies.
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Investors largely anticipate an interest rate cut, though there’s still ambiguity surrounding the magnitude and speed of any policy easing. A 25-basis-point reduction might be interpreted as a cautious pivot, indicating confidence in a managed economic adjustment. Conversely, a more aggressive approach could raise red flags about underlying problems in the US economy, introducing new volatility into the markets. Besides rates, focus will also shift to potential insights about quantitative easing measures, which many analysts believe could be critical in boosting liquidity in risk assets.
For Bitcoin, the stakes are considerable. Despite recent fluctuations, the cryptocurrency has maintained essential levels, buoyed by structural demand and increasing institutional interest. Top analyst Axel Adler notes that the Bitcoin Risk Index currently stands at a low level, suggesting a relatively stable environment with minimal risk of sharp pullbacks or liquidations. This setting provides a cushion for bulls, yet the Fed’s decision could rapidly alter this dynamic.
Bitcoin Risk Index Signals Calm Before Fed Decision
According to Axel Adler, the Bitcoin Risk Index reflects the market’s inherent stability. A higher index indicates a more perilous situation compared to the past three years, suggesting an increased likelihood of sudden pullbacks or liquidations. Currently, the index sits at a mere 23%, a relatively low figure that indicates the market is tranquil and the chances of sharp declines are minimal.
Adler observes that a similar scenario played out between September and December 2023, when the index remained subdued, allowing Bitcoin to gradually gain strength. Throughout that time, volatility was limited and the stable environment laid the groundwork for continued growth. This historical context suggests that the current scenario may be conducive to sustained advancement if unexpected external disruptions are averted.
Nevertheless, Adler emphasizes that the immediate risk is rooted in macroeconomic uncertainty. With Jerome Powell and the Federal Reserve about to make their latest decision tomorrow, investors are exhibiting caution. Adler expressed his hope that there won’t be any surprises from Powell, since unexpected moves could quickly destabilize the current calm.
As the market braces for potential swings, many analysts anticipate that Bitcoin could rally in the upcoming weeks. With risk indicators low, exchange supply tightening, and institutional demand remaining robust, the environment seems supportive for further gains once clarity from the Fed emerges.
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Price Action Details: Holding Key Demand
Bitcoin is trading at $115,739 after a steady recovery from early September lows, demonstrating resilience as it nears a crucial range. The chart indicates that BTC is maintaining positions above the 50-day (blue) and 200-day (red) moving averages, while approaching the 100-day SMA (green), which is currently at $114,417. This area is becoming a significant battleground for both bulls and bears.
Despite intraday fluctuations, BTC has consistently remained above the crucial $114,500–$115,000 support zone, reflecting buyer interest whenever the price dips. The next major resistance lies at approximately $123,217, the previous peak and a significant psychological barrier that bulls need to reclaim for a breakout toward $125,000 and beyond.
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Momentum remains cautious yet positive. The higher lows established since early September indicate that buyers are gradually absorbing supply, even amid macroeconomic uncertainties ahead of the Fed’s interest rate decision tomorrow. A dovish outcome could propel further gains, while a hawkish surprise might drag BTC back toward $112,000.
Featured image from Dall-E, chart from TradingView
