Bitcoin price retraces to $77,000 ahead of Fed rate decision, will it crash?

Bitcoin price fell back towards the $77,000 level after facing rejection at the $78K mark as investors remained cautious ahead of the FOMC decision today.

According to data from crypto.news, Bitcoin (BTC) price faced rejection at around $80,000 on Monday, after which it fell 4% to an intraday low of $75,850 on Tuesday. This came as uncertainty surrounding the opening of the Strait of Hormuz amid stalled peace negotiations between the U.S. and Iran continues to keep investors in risk-off mode.

While investors bought the dip, helping push Bitcoin back to $77,800, it fell short of surpassing the $80K figure as investors entered a wait-and-watch mode ahead of the Fed rate decision set to be announced later today.

Both the CME FedWatch tool and predictions platform Polymarket showed that the odds of the Federal Reserve keeping the interest rates at 3.5% to 3.75% stood at 100%, reflecting a total consensus among market participants.

While the markets had already priced in no rate cuts for April, the ongoing hawkish stance from central bankers has dulled their appetite for Bitcoin and the broader crypto market as a whole, as borrowing costs remain elevated.

Looking ahead, the next key milestone for Bitcoin is the Core PCE data set to be revealed tomorrow. As the Fed’s preferred inflation gauge, this data will be crucial for determining if price pressures are cooling. Early estimates suggest that any surprise in this report could lead to significant volatility across all risk assets.

Despite the short-term dip, some analysts suggest that the current retracement in Bitcoin is typical behavior ahead of major monetary policy announcements. They believe that Bitcoin could still be in a phase of strong market conditions, suggesting that the current consolidation phase may give way to renewed strength once macro clarity emerges.

Bitcoin price analysis

On the daily chart, Bitcoin price has confirmed a bearish breakdown from an ascending channel pattern that has been forming since late March. Historically, such a move indicates that the previous upward momentum is fading and that a deeper correction might be on the horizon.

Adding to the bearish outlook, the MACD has printed a bearish crossover, indicating that short-term momentum has shifted in favor of sellers. This suggests caution for traders considering fresh long positions at current levels.

However, the Aroon indicator offers a mixed signal. While Aroon Up remains elevated at 85.71%, Aroon Down is still relatively low. This implies that despite the recent pullback, the broader uptrend has not fully lost strength, and buyers may still be attempting to maintain control.

For now, $80,000 serves as a formidable psychological resistance, especially with no rate cuts expected in the immediate future. However, if bulls manage to break through this barrier, the next targets would sit at $85,000 and potentially $90,000.

On the downside, a sustained drop below $75,000 would confirm further weakness and could push Bitcoin toward the $70,000 support zone.