Bitcoin Technical Analysis – The attention turns to the FOMC decision

Fundamental Overview

Bitcoin recently broke out of the two-month range to the downside following weak US data that triggered a new growth scare. The catalyst of the selloff was back on February 21^st when we got the weak US PMIs coupled with a new 30-year high in the long-term inflation expectations in the University of Michigan Consumer Sentiment survey.

The market started to fear that in case we get a slowdown, the Fed might not be fast enough in cutting rates amid the inflation constraint and eventually worsen the economic pain. Moreover, the uncertainty around Trump’s tariffs add to those expectations of a slowdown in growth and potentially higher inflation in the short-term.

We can argue that Trump chose the worst time possible to start his trade war as the context is different from his first term when inflation wasn’t a problem. In fact, the market might have swallowed his trade war if it wasn’t for the inflation constraint that limits the Fed’s reaction.

When you want to do fiscal consolidation and avoid a recession, you need help from a dovish monetary policy. This help is constrained at the moment due to inflation being above the target and uncertainty about higher inflation expectations.

The focus now switches to the FOMC decision on Wednesday. The market is currently priced for roughly three rate cuts by the end of the year. If the Fed revises the expected cuts from two to three in 2025, we might get some relief rally in risk assets and Bitcoin. Conversely, if the Fed remains resolute on the two rate cuts, we might see some weakness in the risk sentiment which is likely to weigh on the cryptocurrency.

Bitcoin Technical Analysis – Daily Timeframe

On the daily chart, we can see that Bitcoin continues to trade in the middle of two key levels. From a risk management perspective, the sellers will have a better risk to reward setup around the previous support now turned resistance around the 90625 level where we can also find the downward trendline for confluence. The buyers, on the other hand, will want to see the price breaking higher to regain control and pile in for a rally into a new all-time high.

Bitcoin Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the recent price action has been very choppy due to the high uncertainty in the markets. We don’t have strong levels where to lean onto here. We can notice that the price has been printing higher highs and higher lows recently. If we get a flush lower, the buyers will likely step in around the most recent higher low around the 80000 level to position for the rally into the 90625 resistance. The sellers, on the other hand, will look for a break lower to target the next support around the 73800 level.

Bitcoin Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that the price have been having a hard time breaking above the 84K-85K levels with constant rejections. The higher lows into the resistance though could be a signal that the bulls are in control in the short-term.

There’s not much else we can glean from this timeframe as the sellers will want to see the price breaking below the 80000 level, while the buyers will keep on pushing above the 85000 level. The FOMC decision on Wednesday will likely be a strong catalyst and trigger a sustained move on either side. The red lines define the average daily range for today.

Upcoming Catalysts

Today we get the US Retail Sales data. On Wednesday, we have the FOMC Policy Decision. On Thursday, we get the US Jobless Claims figures.