Bitcoin rose slightly on Wednesday, stabilizing after recent gains, as traders focused on the upcoming U.S. Federal Reserve rate decision later in the day for clearer signals on monetary policy and the outlook for the U.S. economy.
The world’s largest cryptocurrency had reached its highest level in nearly a month on Tuesday after recouping part of the losses suffered in late August. Cryptocurrencies overall have benefited this week from improving risk appetite as markets bet on an imminent U.S. rate cut. However, gains remain capped by growing doubts over corporate treasury strategies toward digital assets.
Bitcoin climbed 0.5% to $116,552 by 01:23 a.m. Eastern time (05:23 GMT).
Fed Decision… and Powell’s Remarks in Focus
The Fed is widely expected to cut interest rates by at least 25 basis points at the conclusion of its meeting on Wednesday, with some traders betting on a larger 50-basis-point reduction.
Expectations have been reinforced by mounting evidence of a slowdown in the U.S. labor market, a key factor pushing the Fed to consider policy easing. Still, signs of persistently high inflation have left markets cautious about the central bank’s outlook.
Fed Chair Jerome Powell has repeatedly warned about the inflationary effects of high U.S. tariffs and is expected to reiterate these concerns in his speech this evening.
Even so, lower U.S. interest rates typically favor cryptocurrencies, as they boost liquidity flowing into risk assets. Notably, Bitcoin’s major bull run in 2021 was fueled by ultra-loose monetary policy in the aftermath of the COVID-19 pandemic.
Bitcoin Reserves Drop, Stablecoin Balances Rise
Data from CryptoQuant showed that Bitcoin reserves on centralized exchanges fell this week to their lowest level since January 2023, suggesting more coins are being moved into private wallets and away from active trading, which reduces potential selling pressure.
At the same time, stablecoin balances on exchanges have increased, reflecting a build-up of ready-to-invest liquidity that could support additional buying and sustain market gains in the coming days.
Possible Scenarios for Bitcoin’s Path
Analyst Ted Bellows outlined two main scenarios for Bitcoin’s price action after the Fed decision:
Scenario 1: Controlled pullback before new rally
Bitcoin could slip toward $104,000 as markets digest the rate cut. This would be seen as a “healthy correction” to shake out weak hands and excessive leverage before resuming a stronger uptrend. That level is viewed as a key support for re-energizing buyers.
Scenario 2: CME gap near $92,000
In a more bearish view, Bitcoin could fall further toward $92,000, an area aligned with an unfilled gap in Chicago Mercantile Exchange futures. Such corrections often attract prices, though this dip might weigh on sentiment in the short term. Still, it could set the stage for a strong rebound to new record highs once the correction completes.
Long-Term Trend Remains Bullish
Despite near-term caution, analysts including Bellows remain optimistic that Bitcoin is in the midst of a broader bullish cycle. Even if the Fed decision sparks short-term volatility, most forecasts see any retreat as a temporary stop on the road to new record highs later in 2025.
For investors, the essential question is not whether Bitcoin will dip, but how quickly it can recover once markets absorb the Fed’s move.
