Bitcoin (BTC-USD) is experiencing high volatility as it faces a key showdown with the U.S. Federal Reserve’s final interest rate decision of the year. The price failed yet another attempt at breaking above the key resistance level of $94,000 on Tuesday, sending the market into a holding pattern ahead of the FOMC announcement on Wednesday.
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Market participants heavily expect the Federal Reserve to cut interest rates by 0.25%, which would be the third cut of the year. Polymarket shows a 96.8% chance that rates will be cut to between 3.50% and 3.75%. However, any potential bullish action from reduced interest rates is likely already priced in by the market.
Powell’s Speech Triggers Market Fear
Bitcoin was retreating toward $92,000 on Wednesday as fears mounted that Fed Chair Jerome Powell’s speech after the meeting could put the market back on shaky ground. The market will watch Powell’s language at the FOMC news conference for any shift in tone, as the Fed’s words often matter more than the rate cut itself.
Bitcoin analyst AlphaBTC highlighted the sensitivity of the market, stating, “Yesterday’s weak jobs data knocked rate-cut hopes slightly and rattled TradFi markets; all eyes now on the Fed and wage data.” The analyst warned that if the Fed surprises the market with a hawkish (aggressive, tightening) tone, or if wage data stays firm, “expect another sell-off.” Market commentator Wess agreed, noting that the market is pricing in a “25bps rate cut, but the real drama will come from Jerome Powell’s speech.”
Key Levels Mark the Battlefield
For the Bitcoin bulls, the first important task is to flip the yearly support at $93,300 into a firm support level, which would then open the path to target higher highs above the $100,000 psychological level. Above $100,000, a major supply zone extends to $108,000, where the important 200-day Simple Moving Average is located.
Conversely, the Bitcoin bears will attempt to defend the $94,000 yearly open resistance level, increasing the likelihood of new lows below $90,000. If that defense holds, the next area of interest lies between $90,000 and the previous range lows at $87,500. Bitcoin analyst AlphaBTC warned that a drop below a key support level would be “catastrophic,” stating, “But Bitcoin must hold 91.5K now IMO, otherwise we will see blood in the streets.” Below $87,500, the next move would be a retest of the November 21 lows of $84,000.
At the time of writing, Bitcoin is sitting at $92,622.04.
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