Ramazan Eles 
Bitcoin’s price bounced back near $65,000 after dipping below $63,000 earlier this week. However, uncertainty lingers as the Federal Reserve’s policy decision on Wednesday looms large.
Sharp Correction After All-Time Highs
Following a streak of record highs, Bitcoin took a tumble last Thursday, dropping over 15% from near $74,000 to below $63,000 by Tuesday. This correction mirrored a broader decline in the crypto market.
Hotter-than-expected inflation data from the U.S. raised concerns about the Federal Reserve’s stance on monetary policy. Investors fear the central bank might be less inclined to ease restrictions, potentially delaying interest rate cuts.
Fed Meeting Weighs on Investor Sentiment
Analysts believe the upcoming Fed meeting is a key factor influencing investor behavior. The market expects interest rates to remain unchanged, but close attention will be paid to adjustments in the Fed’s economic projections, particularly regarding potential delays in interest rate cuts due to persistent inflation.
Disappointing inflows into US-listed Bitcoin ETFs in recent days further highlight investor caution. Vetle Lunde, a senior analyst at K33 Research, attributes this partly to investors waiting for the FOMC meeting’s outcome before taking on risk.
Potential Hawkish Stance Could Dampen Market
A more hawkish stance from the Fed could discourage investors from holding riskier assets like cryptocurrencies. This could put downward pressure on prices and potentially prolong the current correction.
“The Fed decision poses a risk this week,” said Joel Kruger, market strategist at LMAX Group. “Concerns exist over a less investor-friendly policy due to strong US economic data and inflation.” While the correlation between crypto and traditional assets has been low recently, a risk-averse sentiment triggered by the Fed’s decision could spill over into the crypto market.
As of now, Bitcoin trades around $64,500, recovering slightly from its lows but still down 3.5% over the past day.
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