Bitcoin has recently experienced increased volatility, slipping below the $88,000 level as traders navigate upcoming macroeconomic events, particularly the Federal Reserve’s interest rate decision. The digital asset showed sharp price movements, briefly falling to nearly $87,000, signaling nerves ahead of key monetary policy announcements that could influence the broader crypto market and investor sentiment.
Market data indicates heightened activity, with Bitcoin losing around $2,000 over two hourly candles. The near-term price action has contributed to the formation of potential “gaps” in CME Group’s Bitcoin futures markets—a common phenomenon where price levels tend to be “filled” once the trading week resumes. As trader Killa noted, every CME gap over the past six months has been eventually filled, emphasizing the importance of these markers in technical analysis.
Furthermore, Monday typically serves as a pivotal day, with traders often assigning significance to the price movements observed at the start of the week. As Killa explained, “Mondays are typically when pivot highs and lows form, with weekend price action providing critical context.” If markets do not rally over the weekend, the likelihood of a pivot low increases, whereas a weekend bullish move could set the stage for a pivot high on Monday.
Focus on Federal Reserve Meeting and Rate Cut Expectations
The financial community is predominantly focused on the upcoming Federal Open Market Committee (FOMC) meeting scheduled for Wednesday, where a 0.25% rate cut is widely anticipated. The CME FedWatch Tool confirms market expectations, with liquidity, risk appetite, and positioning all hinging on the Fed’s decision.
Historically, Bitcoin tends to experience downward pressure leading into such announcements, often resulting in heightened volatility as traders interpret the language used by Federal Reserve officials for clues on future policy. Analyst Michaël van de Poppe suggests that nervousness ahead of the FOMC could temporarily push Bitcoin’s price toward $87,000 before a swift rebound. He envisions a bullish trajectory, with Bitcoin potentially surpassing $92,000 and aiming for $100,000 in the coming weeks, driven by the Fed’s move to reduce quantitative tightening, cut interest rates, and expand the money supply.
Van de Poppe emphasizes that $86,000 is a critical support level for bullish traders, with the potential for rapid recovery if the key level holds. Market participants remain attentive to these developments as macroeconomic conditions continue to influence digital asset prices.