Bitcoin markets are bracing for potential turbulence as the Federal Open Market Committee prepares to conclude its May 6-7 meeting.
While the federal funds rate is widely expected to remain unchanged at 4.33% (target 4.25%−4.50%), attention will turn to the tone and nuance of Chair Jerome Powell’s subsequent press conference at 2 P.M. EST, which may prove pivotal for risk assets, including Bitcoin.
The backdrop is complex. The U.S. economy has contracted in the first quarter of 2025, marking a reversal from late 2024.
Consumer spending has slowed considerably while inflation remains elevated, with the core PCE price index climbing to 3.5% annually.
At the same time, recently enacted trade tariffs are poised to place upward pressure on prices while dampening growth prospects.
| Indicator | Q4 2024 (Actual) | Q1 2025 (Actual) | Trend & Fed Implications |
|---|---|---|---|
| Real GDP Growth (Annualized) | 2.4% | -0.3% | Contraction signals economic weakening; it pressures the Fed towards a more accommodative stance. |
| PCE Inflation (Annualized) | 2.4% | 3.6% | Acceleration well above target; pressures Fed to maintain a restrictive stance. |
| Core PCE Inflation (Annualized) | 2.6% | 3.5% | Core inflation is also accelerating, reinforcing concerns about underlying price pressures. |
| Unemployment Rate | ~3.7−3.9% (est.) | 4.2% | Slight uptick but still relatively low; gives Fed some room but watching for deterioration. |
| Consumer Spending Growth | 4.0% | 1.8% | Sharp slowdown indicates weakening demand; a concern for future growth. |
This combination has raised the specter of stagflation, leaving the Fed in a precarious position with limited policy flexibility.
Bitcoin’s role and impact in macroeconomics
Bitcoin, which has become more closely tied to macroeconomic narratives amid surging institutional adoption through Exchange-Traded Funds, has responded sharply to Fed policy decisions in recent quarters.
Rate holds have sometimes prompted selloffs, while cuts have often fueled rallies.
For instance, December 2024’s quarter-point reduction coincided with Bitcoin’s climb toward $108,000. By contrast, March 2025’s rate hold was followed by choppy price action, reflecting heightened sensitivity to Powell’s guidance.
The market widely expects another hold, with futures pricing indicating a probability exceeding 97% for this outcome.
Instead, the focal point shifts to forward guidance.
If Powell strikes a dovish tone, emphasizing downside risks to growth, downplaying tariff-driven inflation, or hinting at rate cuts later this year, Bitcoin could see renewed upward momentum.
Conversely, hawkish signals suggesting persistent inflation concerns or skepticism towards easing could pressure prices, with key support levels between $92,000 and $94,000 in focus.
Liquidity conditions surrounding the event may exacerbate volatility. As seen in prior FOMC cycles, options market positioning and thinner liquidity can amplify intraday moves. Traders are watching closely for a potential “sell the news” reaction should Powell’s remarks fail to meet dovish expectations already priced in.
Bitcoin moves after the FOMC meeting
Beyond short-term moves, Bitcoin’s evolving correlation with macroeconomic indicators highlights its maturing market structure. The approval and adoption of spot ETFs have drawn institutional investors who calibrate portfolios based on interest rate trajectories and broader financial conditions.
This shift has aligned Bitcoin more closely with traditional asset responses to monetary policy, though its unique characteristics remain a defining factor.
Analyst projections reflect the range of possible scenarios.
| FOMC Outcome Scenario | Likely Bitcoin Price Direction | Key Bitcoin Price Levels (Support / Resistance) | Supporting Factors / Analyst Commentary |
|---|---|---|---|
| Hold + Dovish Guidance | Up | Support: ~$94k, ~$92k Resistance: ~$98k, $100k, ~$108k |
Lower real interest rate expectations, risk-on sentiment, Powell positive on crypto. Could retest highs or push to $100k. |
| Hold + Hawkish Guidance | Down | Support: ~$92k-94k (initial), ~$89k, high $80k’s Resistance: ~$97k |
Higher-for-longer rate fears, risk-off sentiment. Potential drop to $91.5k-$92k or high $80k’s. |
| Hold + Neutral/Ambiguous | Choppy / Range-bound / Minor Dip | Support: ~$92k-94k Resistance: ~$97k-98k |
Lack of fresh catalyst, profit-taking on priced-in news. Continued consolidation. Volatility is still likely. |
Per Bernstein, Bitcoin could reach $200,000 in 2025 if dovish policy and ETF inflows align favorably. Others, such as 21Shares’ Matt Mena, envision $150,000 by year-end under a bullish macro environment.
Yet bearish voices also persist. Bloomberg’s Mike McGlone has floated the possibility of a steep correction to $10,000 should macroeconomic turmoil deepen.
As Bitcoin dominance climbs past 65% amid risk aversion in altcoins, the digital asset’s dual role as both a macro-sensitive and idiosyncratic asset comes into sharper focus.
Institutional flows increasingly dictate price action, with FOMC meetings now serving as key catalysts.
Thus, today’s decision and Powell’s commentary are poised to resonate well beyond traditional finance, potentially shaping Bitcoin’s trajectory through mid-2025.
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