Crypto Market Holds Breath Ahead of Fed Decision as Bitcoin Steadies, Altcoins Slip
Analysts from QCP Capital suggest that while a rate cut remains unlikely, any dovish commentary from the Federal Reserve could be the trigger for bitcoin’s next leg up, with altcoins potentially following suit.
The crypto market saw mixed performance on Tuesday, with bitcoin (BTC) holding firm while some altcoins experienced declines. Dogecoin (DOGE) and XRP led losses among major tokens, each shedding over 3% in the past 24 hours. The CoinDesk 20 Index (CD20), which tracks leading cryptocurrencies, slipped 2%.
Traders are positioning themselves ahead of the Federal Open Market Committee (FOMC) meeting on Wednesday, which is expected to influence the direction of monetary policy and impact risk-sensitive assets like cryptocurrencies.
The Federal Reserve is widely expected to maintain interest rates at 4.25%–4.50%, but market participants will be closely analyzing comments from Fed Chair Jerome Powell. A hawkish stance, indicating tighter monetary conditions for longer, could weigh on bitcoin and altcoins, while a dovish outlook could spark renewed investor confidence.
“A rate cut this week is unlikely as the U.S. economy shifts away from fiscal dominance—where government-driven spending led growth—toward [President Donald] Trump’s renewed focus on deficit reduction,” QCP Capital traders stated in a market update. “With fiscal support waning, monetary policy will have an outsized impact. Even a subtle dovish tilt from Powell could act as a catalyst for bitcoin’s next move.”
QCP Capital also noted a shift in capital flows, with funds moving away from risk-heavy assets like NASDAQ stocks and bitcoin toward undervalued global markets in Europe and China. Historically, cryptocurrency prices have lagged behind macroeconomic liquidity shifts, the firm added.
Agne Linge of WeFi highlighted that market sentiment remains cautious, with the crypto fear and greed index registering at 22, signaling “extreme fear” as traders navigate concerns over inflation, geopolitical instability, and shifting economic policies.
“In the U.S., the S&P 500 and Nasdaq Composite have both recorded four consecutive weeks of losses, while the Dow Jones slumped 3.1% last week—marking its worst weekly performance in nearly two years. While the downturn has been significant, further uncertainty looms for the remainder of the month,” Linge explained, cautioning that macroeconomic factors could continue to weigh on bitcoin’s price action.
Ryan Lee, chief analyst at Bitget Research, noted that bitcoin is consolidating within a defined range, with its next move largely dependent on how traders interpret the Fed’s stance.
“Bitcoin is currently in a post-rally consolidation phase, with key support levels between $82,000 and $85,000,” Lee said in an email to CoinDesk. “If sentiment turns negative, we could see bitcoin testing the $75,000–$80,000 zone. However, if Powell signals a softer monetary approach, a breakout toward $90,000 could be on the table.”
