Bitcoin awaits Fed rate decision below $76K as analysis discounts ‘dovish surprise’ odds

Bitcoin (BTC) stayed near monthly lows at Wednesday’s Wall Street open as markets awaited the US Federal Reserve’s decision on interest rates.

Key points:

• Bitcoin continued to trade under $76,000 into the Federal Reserve interest-rate decision. It stands near its lowest levels since Aug. 21.
• Markets saw nearly 93% odds of the Fed enacting a 0.25% rate hike, bringing the federal funds rate to 3.75-4%.
• Onchain support thickened at $68,000 as bid liquidity moved toward the current spot price.

Fed rate-hike odds pass 90% despite Trump demands

Data from TradingView showed BTC/USD trading below $76,000 after hitting new September lows of $74,960 the day prior.

BTC/USD one-hour chart. Source: Cointelegraph/TradingView

The weakness occurred as the CLARITY Act failed to garner enough votes in the Senate to advance to the debate stage, falling short of the 60 required. Now, attention has turned to the Fed, as it is facing a balancing act between taming inflation and satisfying the demand of US president Donald Trump, who has repeatedly demanded that rates be cut.

The latest data from CME Group’s FedWatch Tool put the odds of officials confirming a 0.25% rate hike at over 90% at the time of writing, bringing the federal funds rate to 3.75-4%.

Commenting, trading resource The Kobeissi Letter noted that these odds made a rate hike a near certainty.

“In data going back to 2008, whenever expectations of a hike have been this high, the Fed has invariably delivered one. If the Fed decided to leave interest rates unchanged today, it would mark the biggest dovish surprise at a scheduled policy meeting since 1994,” it wrote in a post on X.

The meeting marks just one of three central-bank rate decisions this month. The European Central Bank enacted a 0.25% hike last week, while the Bank of Japan is expected to do likewise at its Friday meeting, bringing its benchmark rate to 1.25%, its highest in 31 years.

Central banks worldwide face increasing price pressures as oil supply chains battle the impact of an expanding war in the Middle East. US WTI crude oil hit $106.70 per barrel on Tuesday, its highest level since May 4.

CFDs on WTI crude oil one-day chart. Source: Cointelegraph/TradingView

As Cointelegraph had reported earlier, oil-price increases have had a pronounced knock-on effect on US Consumer Price Index (CPI) inflation.

Bitcoin price support converges around $70,000

Analyzing short-term BTC price action, onchain analytics platform Glassnode considered where BTC/USD could fall to should it deviate further from its local range, which has been in place since Aug. 21.

Related: Bitcoin Coinbase Premium hits monthly low as CLARITY Act vote squeezes US demand

“Resting bids, the buy orders waiting in the book, have pulled in toward price. Nearly two thirds of the bids resting within 20% of price now sit between 1% and 10% below it, up from about half at the start of the year,” it reported in the latest edition of its regular newsletter, The Week Onchain.

Bitcoin spot-market order-book depth data. Source: Glassnode

Exchange order-book bid liquidity points to $68,000 as the next line of support. Price currently sits just below the True Market Mean, the aggregate cost basis of the currently active BTC supply. The aggregate cost basis of short-term holders, defined as wallets holding an unspent transaction output (UTXO) for less than six months, provides another potential support level at $71,300.

“If the range breaks and those bids are used up, the next floor is the on-chain one at $62K to $65K, where the heaviest block of supply below the market was last bought,” Glassnode added, referring to the price at which around 9% of the supply last moved onchain.