Keep an eye on Bitcoin price levels ahead of Fed Chairman Powell’s speech

    Crypto AI Updates07 mins


    Bitcoin (BTC) is on track to break through the $90,000 resistance level on Wednesday as traders expect the price to fluctuate volatile around the U.S. policy decision on interest rate cuts.

    Important points:

    • There is a 100% chance that the US Federal Reserve will keep interest rates unchanged today.

    • If it breaks out of the major support zone between $80,000 and $84,000, BTC price could fall to $65,500.

    Interest rates remain 100% unchanged

    According to Polymarket data, there is a nearly 100% chance that current interest rates will stay between 3.5% and 3.75%.

    Possible target interest rate at the January 28th FOMC meeting. Source: Source: Polymarket

    Futures market traders also have a 97.2% chance that the Fed will keep rates unchanged, with just a 2.8% chance of a 25bps cut.

    However, market participants point out that bearish price movements due to interest rate unchanged are already priced in.

    Related: Bitcoin’s real “Uptober” moment may begin in February: Here’s why

    But traders have other sources of volatility to contend with, including the Japanese economy, the risk of another U.S. government shutdown, the Federal Reserve’s yen-buying moves and Chairman Jerome Powell’s post-FOMC speech.

    Therefore, the market will be watching closely to see if there is a change in tone in Chairman Powell’s remarks at the FOMC press conference.

    “Tomorrow is the FOMC meeting and the market is confident the Fed will keep rates on hold,” analyst Satoshi Stacker said in a post on X on Tuesday, adding:

    “All eyes will be on Chairman Powell’s press conference and what he suggests about the Fed’s plans in the coming months.”

    “If there is a hint of a rate cut in March, Bitcoin will be sent to the moon,” said crypto investor Kiran Gadak.

    Meanwhile, the U.S. dollar index fell to a four-year low of 95.55 on Tuesday, its lowest level since February 2022.

    US dollar index. Source: Cointelegraph/TradingView

    Historically, a weakening dollar amid macroeconomic and geopolitical uncertainty has depleted liquidity risk assets such as Bitcoin that are needed for upside.

    As reported by Cointelegraph, the BTC/USD pair has historically experienced massive breakouts several months after DXY fell below the 96 mark.

    Analysts highlight important BTC price levels to watch

    Traders said Bitcoin bulls need to hold on to the $80,000 to $84,000 support band to avoid further corrections, with a bear market target of around $58,000.

    According to Daan Crypto Trades, the $84,000 support remains key for bulls, which corresponds to the 0.382 Fibonacci retracement level measured from the 2022 bear market bottom of $15,500 to the local high.

    The analyst shared a chart showing that the 0.382 Fibonacci retracement retest has held throughout the cycle so far.

    Daan Crypto Trades said, “Previously the price reaction was much faster, but now that is not the case,” adding:

    “This is technically still at a remarkable level, but we hope to see some action soon to preserve the structure.”

    BTC/USD weekly chart. Source: Daan Crypto Trades

    “Bitcoin cannot lose $81,000 under any circumstances,” Joanne Wesson, founder and CEO of AlphaRactal, said in an X post on Tuesday.

    Losing this level would mean “a capitulation process similar to 2022 could unfold,” Wesson said, adding:

    “The next big support will be around $65,500.”

    Bitcoin: Fibonacci adjusted market average price. Source/;Alphaactal

    On the upside, there is an important area to watch between $90,000 and $94,000, where the 50-day and 100-day moving averages are located.

    Beyond that, the next move will be to retest the psychological level of $98,000, which is also the cost basis for short-term holders.