Bitcoin Traders? Are Looking at a Key Data Point in Fed Meeting and It's Not Interest Rate Decision

The Federal Reserve's (Fed) Open Market Committee, comprising 12 officials, is scheduled to announce its decision on interest rates at 18:00 UTC on Wednesday, followed by Chairman Jerome Powell's press conference half an hour later.

The CME Group's (CME) FedWatch tool indicates that the central bank is again likely to hold ground and keep interest rates unchanged in the range of 4.25%-4.50% despite President Donald Trump's repeated demands for lower borrowing costs.

The rate decision, therefore, is a foregone conclusion and crypto traders are likely to focus on the interest rate dot plot ? the graphical representation that records each Fed official's projections for interest rates.

"With rates expected to stay on hold, traders are focused on the dot?plot: fewer than two projected cuts would harden the higher?for?longer?narrative; a dovish surprise would lighten the dollar and could unfreeze crypto's bid. Until then, patience rules," crypto trading and market-making firm XBTO said.

A hawkish dot plot, suggesting fewer rate cuts, could put pressure on bitcoin and the broader crypto market. BTC's rally has already stalled above $100,000, with geopolitical tensions in the Middle East adding to the trade war-led inflation uncertainty.

"During 2025, expectations for rate cuts have already declined sharply, from an initial 100 basis points to just 50 basis points currently. This revision is driven by a resilient labor market and inflation that, while moderated, remains above the 2% target. A prolonged conflict in the Middle East could further reduce anticipated cuts to just 25 basis points," Matteo Greco, senior analyst at Fineqia (FNQQF), said in an email.

While the hawkish Fed could breed downside volatility in bitcoin, it will likely worsen the U.S. fiscal situation by adding to the nation's debt servicing costs and thereby strengthening the long-term appeal of assets like gold and bitcoin.