BTC struggles to hold $115K in spite of Fed’s Dovish Shift

Takeaways from the conference:

• Bitcoin struggles to stay above $115,000 following the Fed’s 25 bps rate reduction.

• Fed announced additional cuts of 50 basis points through 2025.

• Bitcoin Futures Open Interest surged, while Spot Volumes continued to fall.

BitcoinBTC) is trying to steady its price above $115,000 after the United States Federal Reserve delivered a 25-basis point cut to interest rates, lowering the benchmark range to 4.0%–4.25%. The crypto market’s immediate reaction was muted as traders digested the cautious tone of the central bank. BTC briefly dropped below $115,000 and is now trying to reach the level of the hourly candle. 

Federal Open Market Committee’s (FOMC) Wednesday statement highlights It is clear that employment growth has slowed down, while unemployment and inflation remain elevated. The Fed has acknowledged the increased downside risk to the employment situation, which has shifted the policy towards a more dovish stance.

The Fed has become increasingly worried about balance of risks, as shown by new projections. Although the FOMC reiterated its continued commitment to the 2% target for inflation, it shifted the emphasis more towards supporting growth and job creation in response to the slowing of momentum.

Stephen Miran was one of the few Fed governors who disagreed. He favored an even deeper cut by half a point, which reinforced the impression that the Fed is setting up the markets for more accommodative policies in the future.

Bitcoin has reacted slowly despite the implications of dovishness, as price consolidation is more important than directional momentum. Investors are cautious and weigh the Fed’s longer-term eased trajectory with uncertainties about inflation dynamics, global markets, and other factors.

Related: Federal Reserve expected to slash rates today, here’s how it may impact crypto

What will Bitcoin look like in the next few years?

Cointelegraph earlier reported Nic Puckrin is a financial analyst who believes the Fed’s interest rate reduction has been already priced in to the market, increasing the chances of a temporary drop. “sell the news” reaction. Though lower borrowing costs usually support risk assets in the long run, traders warn initial optimism can fade quickly. 

The longer term outlook is still positive under a prolonged easing cycle.

Bitcoin open interest shot up immediately following the FOMC’s announcement. This was a sign that traders of futures were preparing themselves for increased volatility. But spot market activity was telling a completely different story. Aggregated spot volumes continued to drop even as futures volume spiked. 

It is clear that this divergence indicates the price movement at present is largely driven by leveraged position rather than actual spot demand. It is difficult to predict the future of this move without a greater presence of buyers.

Related: Price predictions 9/17: BTC, ETH, XRP, BNB, SOL, DOGE, ADA, HYPE, LINK, SUI

This article contains no investment recommendations or advice. Risk is inherent in every investment decision and trade. The reader should always do research prior to making a final decision.