Bitcoin Tests $97,000 As Fed Holds Rates Steady

Bitcoin reached $97,000 on Thursday as the Federal Reserve maintained interest rates at current levels, signaling continued caution over inflation concerns. The world’s largest cryptocurrency has gained nearly 15% over the past month despite facing resistance at the crucial $100,000 psychological threshold.

The Fed’s decision to hold rates between 4.25% and 4.5% comes amid mixed economic signals, with investors closely monitoring how monetary policy might impact risk assets like cryptocurrencies in the coming months.

Fed’s Cautious Approach Influences Crypto Markets

During Wednesday’s Federal Open Market Committee meeting, Fed Chair Jerome Powell emphasized concerns about both inflation and unemployment risks, maintaining a measured stance that analysts suggest could support Bitcoin’s position as a potential inflation hedge.

“The crypto market is not yet showing sustained growth,” noted Alex Kuptsikevich, FxPro chief market analyst, according to TheStreet. “Bitcoin remains above its 50-day moving average, and the current lull can be attributed to risk aversion ahead of the Fed meeting.”

Historically, Bitcoin has demonstrated sensitivity to monetary policy shifts, with previous rate cuts generally supporting price appreciation. The cryptocurrency’s performance following the FOMC announcement suggests continued institutional confidence despite short-term volatility.

Institutional Confidence Driving Bitcoin’s Trajectory

Matthew Sigel, VanEck’s head of digital assets research, recently stated the crypto market is in “blue sky territory” with no technical resistance, predicting repeated all-time highs over the next two quarters, as reported by TheStreet Crypto.

Bitcoin has appreciated approximately 30% since the day after the 2024 presidential election, reflecting enhanced confidence in the regulatory environment for digital assets. Market experts attribute this performance to shifting consumer attitudes and increased institutional involvement in cryptocurrency markets.

VanEck’s analysis suggests Bitcoin could potentially reach $180,000 by the end of 2025, representing nearly a 100% increase from current levels if market conditions remain favorable.

Altcoin Performance Lags Behind Bitcoin

While Bitcoin maintains its upward trajectory, several major altcoins have experienced price pressure. Cardano’s ADA and Ripple’s XRP led losses among major cryptocurrencies, both declining approximately 4% while traders evaluated Fed policy implications, according to CoinDesk.

Ethereum, the second-largest cryptocurrency by market capitalization, has struggled to maintain momentum above $3,000 per token. Market analysts suggest Ethereum’s performance relative to Bitcoin may indicate shifting investor preferences in the current macroeconomic environment.

DeFi tokens have shown resilience against this trend, with assets like Hyperliquid’s HYPE gaining up to 70% over the past week, demonstrating continued investor interest in decentralized finance applications despite broader market uncertainty.

Market Outlook Remains Cautiously Optimistic

Bitcoin investors are now focusing on several potential catalysts including further institutional adoption, potential shifts in monetary policy, and continued integration of cryptocurrencies into traditional financial systems.

Trading volumes have remained robust throughout recent price action, suggesting continued market liquidity and engagement. On-chain metrics indicate decreased selling pressure among long-term holders, potentially supporting price stability at current levels.

As Bitcoin tests the $97,000 level, market sentiment indicators suggest a balanced outlook with investors maintaining positions while remaining attentive to economic indicators and potential regulatory developments in the coming weeks.