5 Minutes
Why Bitcoin is Rising Ahead of the Fed Decision
Bitcoin has climbed more than 5% in recent days as market participants price in a likely Federal Reserve interest rate cut. Traders and investors expect the Fed to reduce the target federal funds rate by 25 basis points — from the current 4.25%–4.50% range — and that expectation has pushed liquidity into risk assets, including BTC and other cryptocurrencies. With the U.S. dollar softening and macro sentiment shifting toward easier monetary policy, crypto markets have responded with renewed bullish momentum.
Macro backdrop: Fed signals and dollar weakness
Markets are positioning for a 0.25% rate cut at the Federal Open Market Committee announcement scheduled for September 17 at 2:00 p.m. local time. Reuters noted the dollar fell to a four-year low just before the expected decision, a dynamic that typically supports assets perceived as inflation hedges or higher-yield risk instruments — such as gold and cryptocurrencies. When the dollar weakens, liquidity often flows into alternative assets, increasing demand for Bitcoin and helping to lift the overall crypto market cap.
Crypto market reaction and liquidity flows
The broader crypto market has responded in kind. Over the past week, Bitcoin surged by more than 5%, while the total crypto market capitalization moved past the psychological $4 trillion mark and currently sits around $4.16 trillion as more funds enter the space. This inflow reflects a mix of speculative positioning and portfolio rebalancing ahead of a potential easing cycle, which traders expect will support higher asset prices over the coming months.
Analyst outlook and price catalysts
Prominent market commentators have weighed in on the outlook. For example, BitMine Chairman Tom Lee has predicted what he calls a potential "monster move" for major cryptocurrencies like Bitcoin and Ethereum if the Fed follows through with a rate cut, forecasting a multi-month rally driven by easier monetary conditions. Analysts point to historical precedents: Bitcoin has often rallied in the run-up to, and immediately following, dovish policy moves, as traders buy the rumor and then buy the news if liquidity conditions improve.
Short-term technical picture for BTC
At the time of reporting, Bitcoin was trading around $117,319, up roughly 1.23% in the latest snapshot, showing resilience as markets await the Fed announcement. Price action earlier showed a successful rebound from a $116,200–$116,300 support band and a decisive push above the $117,200 level, indicating buyers have been active and willing to absorb selling pressure in anticipation of the Fed decision.
Chart snapshot and momentum indicators
Price chart for Bitcoin in the past few hours leading up to the Fed decision
The Relative Strength Index (RSI) recently reached 71.99, briefly entering overbought territory, which reflects strong bullish sentiment. The RSI has since eased slightly, signaling the possibility of short-term consolidation even as the broader momentum remains tilted to the upside. Should the Fed confirm a 25-basis-point cut, traders are likely to interpret that as a green light for increased risk-taking, which could lift BTC toward higher resistance levels.
What to watch next: scenarios and price targets
Traders are monitoring both fundamental signals from the Fed and immediate technical levels. If the Fed maintains a dovish stance and signals a sustained easing cycle, Bitcoin could test and possibly surpass the $118,000 level as liquidity conditions favor risk assets. Conversely, if the Fed adopts a more cautious or hawkish tone — signaling that future cuts are not assured — BTC could retrace toward the $116,500–$116,700 range as traders tighten positions.
Key indicators and risk considerations
Important variables to watch include the Fed’s forward guidance, real-time dollar movement, institutional flows into crypto products, and derivatives market metrics like futures open interest and funding rates. High RSI readings and rapid short-term rallies can increase volatility and the chance of sharp pullbacks, so risk management remains critical for traders and investors. Additionally, broader macro developments — such as economic data releases, geopolitical news, or capital flows — can quickly alter the price trajectory.
Takeaway for investors
The current rally underscores how closely Bitcoin and the crypto market respond to expectations around U.S. monetary policy and dollar strength. With the market priced for a 25-basis-point cut, Bitcoin’s near-term path will depend on whether the Federal Reserve meets or changes those expectations. If the Fed delivers the anticipated easing and signals further accommodation, BTC could gain additional momentum and push toward higher resistance. If the message is more cautious, short-term consolidation or minor retracement is possible.
For investors, the key is balancing conviction about the longer-term case for digital assets with disciplined position sizing and attention to macro catalysts. Monitoring on-chain flows, exchange balance trends, and macro indicators will help market participants navigate the volatility that often accompanies central bank policy events.
Source: crypto
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