Bitcoin Price Analysis: BTC Plummets Ahead Of Fed Decision On Interest Rates

Bitcoin (BTC) plunged into the red after failing to move past the 200-day SMA and the $84,000-$85,000 resistance zone. The flagship cryptocurrency is down over 3% during the ongoing session, struggling to hold above $81,000. 

BTC has traded below the 200-day SMA since the beginning of last week, with technical indicators suggesting a bearish pivot. CryptoQuant CEO Ki Young Ju has warned that the Bitcoin bull cycle has ended, predicting a slow year ahead for the crypto ecosystem. 

Bitcoin (BTC) Holding Its Breath 

Bitcoin (BTC) appears to be in a holding pattern ahead of tomorrow’s rate-cut decision by the Federal Reserve. Investors are moving significantly less BTC than they were this time last week after President Donald Trump paused his trade war yet again. The past 24 hours have seen $22 billion of BTC change hands, a significant drop from $49 billion a week prior. According to data from the CME FedWatch Tool, only 1% of traders are hopeful the Federal Reserve will announce a rate cut tomorrow. President Trump is also among those calling for the Federal Reserve to cut rates. Trump had said in remarks made in a video conference with the World Economic Forum in Davos, 

“I'll demand that interest rates drop immediately. And likewise, they should be dropping all over the world.”

The European Central Bank and the Bank of England have all announced rate cuts. However, the Fed has adopted a more cautious approach and resisted calls to implement a rate cut. According to Ryan Lee, Chief Analyst at BitGet Research, markets could see some positive action if Fed Chair Jerome Powell indicates the Fed will cut rates later in the year. 

“Crypto markets could see a short-term rally if the Fed signals future rate cuts, boosting risk appetite, or a dip if a hawkish stance reinforces tighter financial conditions. However, Bitcoin’s growing resilience and pro-crypto policy tailwinds might temper the broader market impact.”

Analysts at QCP Capital agreed with Lee’s outlook, stating, 

“While we do not anticipate a surprise cut, any dovish signal from Powell could be the catalyst that sparks upside momentum.”

Bitcoin ETFs Register $275 Million Inflows 

Spot Bitcoin ETFs registered substantial inflows on Monday after two weeks of consistent outflows. Bitcoin ETFs registered inflows worth $275 million on Monday, indicating a resurgence of investor confidence in the flagship asset. Fidelity’s FBTC led the inflows with $127 million, followed by Ark 21Shares’ ARKB, which saw inflows worth $88.5 million. BlackRock’s IBIT saw inflows worth $42 million, while Grayscale’s GBTC saw inflows worth $14 million. Other notable contributors included Bitwise’s BITB, with $2.30 million. The collective inflows raised the total net assets. 

Bitcoin Boom Is Over: CryptoQuant CEO 

CryptoQuant CEO Ki Young Ju has warned that the Bitcoin bull cycle has ended, in a dramatic shift to his outlook. The warning comes just days after Ju said it was too early to call this a bear market. The CryptoQuant CEO now predicts 6-12 months of sideways or bearish movement for the flagship asset, citing clear warning signs from on-chain metrics and indicators. The change in outlook comes as BTC struggles to regain momentum after a steep decline from its all-time high. 

Ju made his prediction based on a Principal Component Analysis (PCA) of key on-chain indicators, including Market Value to Realized Value (MVRV), Spent Output Profit Ratio (SOPR), and Net Unrealized Profit/Loss (NUPL). All the above metrics are aligned with bear market conditions, according to Ju. Ju also highlighted the drying up of fresh liquidity, crucial for sustaining BTC’s price growth. Bitcoin whales are also selling their BTC at lower prices, a trend associated with the beginning of bearish sentiment. 

Bitcoin (BTC) Price Analysis 

Bitcoin (BTC) has struggled in recent sessions and is confined between $81,000 and $84,000, with buyers finding it difficult to push the price beyond the 200-day SMA. While the market is cautious, analysts at Rekt Capital have pointed out BTC’s current price action mirrors the price action in June 2021, with the flagship cryptocurrency registering a steep decline and trading between the 21-week and 50-week EMAs. BTC ultimately broke out of this range to hit an all-time high in November, raising speculation it could follow a similar trajectory this time around. 

“Back in June 2021, the price was consolidating between the 21-week EMA (green) and 50-week EMA (blue) after a crash. Right now Bitcoin is consolidating between the same EMAs after a crash (By the way, $BTC indeed broke out from its triangle by late July 2021 to reach new All-Time Highs in November 2021).”

BTC registered a sharp decline on Sunday as it plunged below the 200-day SMA and $80,000 on its way to a low of $79,987. The price recovered to reclaim $80,000 and settle at $80,736, ultimately registering a drop of over 6%. BTC surged to an intraday high of $84,075 on Monday as buyers attempted a recovery. However, it lost momentum after reaching this level, dropping almost 3%, slipping below $80,000 and settling at $78,620. The price fell to $76,642 on Tuesday as selling pressure intensified. The price rebounded from this level as buyers stepped in, and registered an increase of 5.50% to reclaim $80,000 and settle at $82,943. Buyers retained control on Wednesday as BTC rose almost 1% and settled at $83,709 despite facing selling pressure.

Source: TradingView

However, BTC was back in the red on Thursday, dropping over 3% to $81,136, but not before hitting an intraday low of $79,955. Bullish sentiment returned on Friday as markets registered a substantial bounce. As a result, BTC rose almost 4% to move past the 200-day SMA, reaching an intraday high of $85,363 before settling at $84,002. Buyers retained control on Saturday as the price registered a marginal increase and settled at $84,398. Selling pressure returned on Sunday after BTC failed to move past the 20-day SMA. As a result, the price fell over 2%, slipping below the 200-day SMA and settling at $82,611. BTC started the current week positively, registering an increase of almost 2% and settling at $84,017. However, it is back in the red during the current session, down nearly 3% as it struggles to hold above $81,000.

BTC is trading within a downward trend channel, signaling consistent selling pressure. The flagship cryptocurrency has support at $80,000 and faces resistance at around $92,000. If BTC dips below $80,000, it could experience further downside. Buyers must push BTC past the 200-day SMA and $85,000 to prevent a bearish outlook. While price action may be sideways or bearish for some time, the long-term trend remains bullish.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.