Bitcoin Price Forecast: BTC expects volatility on Fed interest rate decision

• Bitcoin price recovers and hovers around $102,800 on Wednesday after declining for four consecutive days.
• A K33 Research explains how Nvidia’s big drop this week, driven by DeepSeek, affected Bitcoin price.
• The upcoming Fed interest rate decision on Wednesday could bring volatility spikes in risky assets like Bitcoin.

Bitcoin (BTC) price recovers and hovers around $102,800 on Wednesday after declining for four consecutive days. A K33 Research explains how Nvidia’s big drop in stock valuation this week, driven by DeepSeek, affected Bitcoin’s price. The upcoming Federal Reserve (Fed) interest rate decision and the tone of the Federal Open Market Committee (FOMC) statement later in the day could bring volatility spikes in risky assets like Bitcoin.

Bitcoin price expects volatility on Fed interest rate decision

Bitcoin’s price hovers around the $102,800 level on Wednesday after declining for four consecutive days since Saturday. Wednesday’s upcoming Federal Reserve interest rate decision will likely cause volatility spikes in risky assets like Bitcoin.

FXStreet analyst Lallalit Srijandorn said in a post, “The Fed interest rate decision will be in the spotlight later on Wednesday, with no change in rate expected.”

The analyst continued that investors will closely monitor Fed Chair Jerome Powell’s press conference, which might offer additional insights into the monetary policy outlook.

A Fed officials’ cautious stance could support the Greenback and cause leading risky assets like Bitcoin to decline. 

Moreover, in an exclusive interview, Shubh Varma, CEO and Co-founder of Hyblock Capital, told FXStreet, “One of the most significant macroeconomic factors right now is Trump’s call for lower interest rates.”

“Trump has expressed a desire to push the Federal Reserve to reduce rates, believing that this could stimulate economic growth. This has created tension with Fed Chairman Powell, whose hawkish stance in December still lingers in the market’s mind. Markets are left to navigate this uncertainty, with some speculating that such a shift could accelerate inflation if rates are lowered too quickly, which could ultimately affect both traditional and digital assets, including Bitcoin.” Verma said.

Verma concluded that if inflation remains subdued and growth continues, the environment could remain favorable for crypto, including Bitcoin, which is increasingly viewed as a hedge against inflation.

Nvidia sends shockwaves to Bitcoin – K33 report

A K33 Research’s “Ahead of the curve” report on Tuesday explains how Nvidia’s big drop in stock valuation this week, driven by DeepSeek, affected Bitcoin price.

The report explains that a stronger correlation between BTC and US equities has recently emerged. BTC was not immune to Nvidia’s drop caused by the announcement of DeepSeek, a reportedly cost-effective Chinese Artificial Intelligence (AI) start-up rival to existing solutions. NVIDIA dropped 17%, while the Nasdaq saw a 3% fall. BTC dropped a relatively moderate 2.6%. The market is now focused on this week’s FOMC, while participants consider the impact of the previous FOMC, potentially adding to the sentiment shift towards de-risking. 

The report states, “One can argue that the BTC drop on Monday was caused by noise, but the aggressive de-risking on CME speaks volumes of general caution among professional traders.”

The report also noted that CME premiums quickly fell to negative territory for the first time since August 2023, while open interest had its largest daily drop by 17,225 BTC. Additionally, January contracts expiring on Friday will further the decline in open interest. While premiums have since returned to slightly positive territory, this CME activity shows bearish sentiment, favoring caution. 

CME Bitcoin Futures: Open Interest and Daily Change chart. Source: K33 Research

CME BTC and ETH Futures annualized rolling 1-month basis chart. Source: K33 Research

Moreover, Exchange-Traded Products (ETP) flows have moderated over the past week, with Bitcoin ETPs seeing net weekly inflows of 6,698 BTC over the seven days, with weekly net flows being significantly impacted by a large 6,900 BTC net outflow on Monday amidst the broad NVIDIA-led market collapse.

Daily Global Net BTC ETP flows chart. Source: K33 Research

Bitcoin Price Forecast: BTC rally towards $109,000 or correction to $90,000

Bitcoin price dipped to retest its 50-day Exponential Moving Average (EMA) at $98,223 but recovered and closed above $102,000 on Monday. However, it declined slightly on Tuesday. At the time of writing on Wednesday, it hovers around $102,800.

If BTC breaks below $100,000 and closes below the 50-day EMA on a daily basis, it could extend the decline and test its next key support around $90,000.

The Relative Strength Index (RSI) indicator on the daily chart reads 55, rebounding above its neutral level of 50 on Tuesday and signaling a slight rise in bullish momentum. However, the Moving Average Convergence Divergence (MACD) indicator flipped a bearish crossover on Tuesday, giving a sell signal and suggesting a downtrend ahead.

BTC/USDT daily chart

However, if BTC continues recovering, it could retest its January 20 all-time high of $109,588.