Bitcoin holds above $81,000 as markets expect Federal Reserve to pause interest rates
The Federal Open Market Committee concludes its meeting today with a 93.4 per cent probability of rates staying between 3.75 per cent and 4.00 per cent.
Key takeaways
- 1The Federal Reserve is widely expected to keep interest rates between 3.75 per cent and 4.00 per cent.
- 2Bitcoin recovered to $81,230 on Wednesday morning after a brief dip below $80,000.
- 3US spot Bitcoin ETFs attracted $176 million in net inflows on Tuesday.
- 4Ethereum investment products saw $60.22 million in net withdrawals during the same period.
- 5The Fed policy statement and press conference are scheduled for Wednesday afternoon in Washington.
The US Federal Reserve is expected to maintain interest rates at 3.75 per cent to 4.00 per cent when it concludes its policy meeting on Wednesday. Markets have largely priced in a pause following a quarter-point increase in September. The decision will be announced at 2:00 p.m. ET, followed by a press conference thirty minutes later.
Bitcoin recovered to $81,230 after briefly dipping below $80,000 on Tuesday, while Ethereum traded near $2,363 and XRP held at $1.33. CoinGape reported that traders assign a 93.4 per cent probability to a rate pause. Only 6.6 per cent of market participants expect another increase during this session.
Interest rate decisions influence cryptocurrency prices because higher borrowing costs usually reduce demand for riskier assets. Lower rates or signals of future cuts can increase liquidity in financial markets, which often supports the price of Bitcoin and other digital tokens. This meeting is the first since the September hike.
Institutional demand showed a split between the two largest assets before the announcement. American spot Bitcoin exchange-traded funds recorded $176 million in net inflows on Tuesday, with the BlackRock IBIT fund accounting for $151 million of that total. Ethereum funds saw $60.22 million in net withdrawals, with BlackRock’s ETHA reporting the only outflows for the day.
Fed Chair Kevin Warsh will hold a press conference to explain the committee's outlook on inflation and employment. Coinpedia said that persistent inflation and high energy prices have limited the immediate expectations for rate cuts. Investors are looking for guidance on whether the central bank views current inflation levels as a reason to keep rates high for a longer period.
Analysts are watching key price levels that could trigger further volatility after the announcement. Bitcoin faces immediate resistance at $85,000, while a drop below $80,000 could lead to a test of support at $77,000. For Ethereum, a breakdown below $2,316 would weaken the current recovery outlook, while XRP has established support near $1.30.
The total cryptocurrency market valuation rose 1.72 per cent over 24 hours to reach $2.71 trillion on Wednesday morning. This rebound follows a difficult month for Bitcoin, which had declined 4.2 per cent in October before the latest recovery. The final market reaction will depend on whether the policy statement matches the high expectations for a pause.
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Reported and edited by the YourKhabri desk under our editorial policy. Nothing here is investment advice.