Bitcoin stalls near $74K as focus shifts to Fed decision

Bitcoin’s rally has paused near $74,000 as attention turns to today’s Federal Reserve rate decision.

The largest cryptocurrency briefly rose to $76,000 yesterday before pulling back to around $74K at the time of writing. The move marked eight consecutive days of gains, followed by a slight pullback on Tuesday.

Crypto’s recent strength has come as broader risk assets show resilience despite the ongoing conflict in the Middle East. U.S. equities are rising this week, with the S&P 500 up 1.3% so far, and futures pointing to another positive session, even as oil prices remain elevated near $100 per barrel and there are no clear signs of de-escalation in the Iran conflict.

Focus turns to the Fed

Attention is now firmly on the Federal Reserve, which is widely expected to leave interest rates unchanged in the 3.5%–3.75% range. With the decision largely priced in, markets will focus on the Fed’s updated economic projections for inflation and growth, as well as the dot plot. These come against a backdrop of rising oil prices, which are expected to add inflationary pressure in the coming months.

The key question is whether policymakers will continue to signal a rate cut later this year or shift toward a more hawkish stance. Markets are currently pricing in a 25 basis point cut no earlier than September. 

 Source: CME Fedwatch

A more hawkish tone from the Fed could strengthen the U.S. dollar and weigh on risk assets. This would typically be negative for Bitcoin, which tends to perform better in lower interest rate environments amid increased liquidity.

Oil and inflation in focus

Federal Reserve Chair Jerome Powell’s comments on the expected inflationary impact from the recent surge in oil prices will be closely watched. Markets will want to know whether the Fed views the rise as a temporary shock — which could support risk sentiment — or as part of a more persistent stagflationary problem that could limit the scope for rate cuts.

There are growing expectations that Powell may avoid sounding overly hawkish, which could help support Bitcoin in the near term.

Institutional demand remains supportive

Institutional flows continue to provide a tailwind. Bitcoin ETFs recorded $199.3 million in net inflows on Tuesday, marking the seventh consecutive day of inflows — the longest streak since October, when BTC rallied to a record high above $126K.

However, total inflows in the current run stand at around $1.2 billion, still well below the nearly $6 billion seen during the October rally, suggesting that while demand is improving, it has yet to reach previous levels.

BTC technical analysis   BTC continues to trade below its multi-month falling trendline and 200 SMA, keeping the longer-term bearish bias. However, this could shift to a bullish trend if BTC extends its recent break out.

BTC broke out of its recent range above 74k to a peak of 76k, the 23.6% Fib retracement of the 126k high and the 59.5k low. The price has eased back slightly to test the 74k support.

Buyers, supported by the rise above the 50 SMA and the RSI above 50 will look to rise above 76k to extend gains towards 80k, the round number, the November low, and the falling trendline. Above here, 85k comes into focus, the 38.2% Fib retracement. Above here, the longer-term bias is on a firmer footing.

A break below 74k and 71k, the 50 SMA opens the door to 65k, the lower band of the horizontal channel. Should sellers take out this support, it opens the door to 60k.

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