- BTC rallied 5% on Tuesday after the Fed left rates unchanged.
- Stagflation worries rose, but the Fed maintained expectations of 2 rate cuts in 2025.
- QT was slowed & Powell calmed recession worries.
- Crypto metrics turn positive.
- BTC rises above the key 200 SMA.
Bitcoin pushed higher on Thursday, rising above 85k and the 200-day moving average after the Federal Reserve left interest rates unchanged but maintained its rate cut projections for the year.
BTC rallied from a low of 82.5k yesterday to a peak of 87k in a move that sparked $339 million in liquidations; $ 257.3 million of which were short positions and $82.8 million long.
While the price has eased back to 85.9k at the time of writing, it remains above the key 200 SMA resistance turned support.
The Fed Leaves Rates On-hold
The Federal Reserve kept interest rates unchanged in a range of 4.25% to 4.5%, in line with expectations. However, the US central bank acknowledged the challenging macroeconomic backdrop owing to Trump’s trade tariff policies by lifting its inflation forecast while cutting its growth projection, outlooks that require differing monetary policy measures.
The Fed now sees inflation rising to 2.7% in 2025, up from its 2.5% projection made in January. However, growth is now expected to be 1.7%, down from the 2.1% forecast at the start of the year. Yet despite this stagflation outlook, the Federal Reserve’s medium dot plot maintained two 25 basis point rate cuts this year. According to the CME Fedwatch tool, the market is pricing in the next cut in June.
The Fed also said it will slow quantitative tightening (QT) by reducing its monthly treasury cap from $25 billion to $5 billion. This could ease liquidity pressures, supporting risk assets such as crypto and stocks.
Furthermore, Federal Reserve chair Jerome Powell said he saw an increase in inflation from trade tariffs as transitory. He added that while the odds of a recession had increased, they were still low.
BTC Metrics Are Turning Positive
The Fed’s maintaining its rate cut outlook, combined with calming words from Fed Chair Powell, has helped to support the market mood. Risk assets across the board are rising. The Crypto Fear and Greed Index, which tracks sentiment, has moved to neutral territory at 49 after hovering in the Fear area since late February.
Institutional demand is also showing signs of recovery after net inflows rose to $495 million over the past three days. The shift from persistent outflows to inflows reflects growing confidence driven by Bitcoin’s price stabilization and returning institutional interest. The inflows came after five straight weeks of outflows, as Bitcoin’s price slumped to a 77k low amid geopolitical worries and fears that Trupp’s trade tariffs could push the US economy into a recession.
Technical Analysis
Bitcoin has broken above the 200 SMA resistance with a bullish engulfing candle. This combined with a rise above the 85k-86k resistance could open the door to 90k.
The 200 SMA offers immediate support at 84.5k. A break below here could see selling momentum increase and bear look towards 80k.
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