Will Bitcoin traders ‘sell the news?’ Price stalls at $74,000 ahead of key March Fed FOMC meeting

Bitcoin traders are bracing for a “sell-the-news pattern” that has played out after seven of the last eight Federal Reserve meetings, according to Jonatan Randin, senior market analyst at PrimeXBT.

The top crypto jumped above $74,000 ahead of Wednesday’s FOMC, but Randin told DL News that he’s not convinced the rally is a “genuine risk-on signal,” which would have suggested that investors are ready to tap into riskier assets like cryptocurrencies.

“Volume behind this push has been thin,” he said. “We need buyers to step in and confirm this level, and we’re simply not seeing that today.”

Randin’s words of caution come as the investors are already pricing in the Fed holding interest rates at their current level of 3.50-3.75% with near certainty, the CME FedWatch tool shows.

However, they have not yet priced how Chair Jerome Powell interprets a stagflationary shock stemming from the geopolitical chaos as the US and Israeli war on Iran escalates. Every adjective in the statement, every inflection at the press conference, will be parsed for clues about whether the Fed leans hawkish, defensive or quietly flexible.

On Wednesday, the US central bank convenes in a wartime setting that began almost three weeks ago. The Middle East conflict has pushed oil above $100 a barrel and upended the Fed’s baseline outlook for key metrics like inflation.

Randin flagged meaningful de-escalation and restored oil flows through Hormuz as ways sentiment could quickly transform and unlock a relief rally toward $80,000. Absent that, Bitcoin’s is likely to either remain steady at current level or to drop.

Fed bind

The Fed drives investors’ sentiment — and the numbers aren’t looking too rosy.

US economic growth has slowed sharply while GDP has been revised down to 0.7%. February payrolls turned negative, with 92,000 jobs lost. Core PCE has accelerated to 3.1%. Gasoline prices average $3.79 per gallon, more than 25% higher than before the war. Airlines warn of rising travel costs as jet fuel prices surge.

For Bitcoin and other risk assets, investors will dissect three things: whether Powell describes the oil shock as transitory or persistent; whether the statement frames policy as two-sided, implying rate hikes remain on the table; and whether the updated projections show inflation drifting further from the 2% target.

While Bitcoin has performed as a hedge against the dollar since February, investors have little room for disappointment, Nicolai Søndergaard, research analyst at Nansen, said in an investor note shared with DL News.

In other words, if Powell signals vigilance on inflation and hints at a higher-for-longer stance, traders will treat that as a green light for profit-taking.

Geopolitics

The wildcard remains the developing situation in the Middle East.

The US-Israeli conflict with Iran has disrupted flows through the Strait of Hormuz, keeping crude elevated and inflation risks front and centre. Without a clear stopping point to the bombing campaign, economists say the domestic and global impacts depend on how long the war continues and whether oil retreats below $80 or pushes further above $100.

Stock markets reflect the strain. The S&P 500 has fallen roughly 4% from its January 27 record high, though has trended up in early hours trading on Wednesday.

Central banks globally are aggressively responding to inflation risks, with the Reserve Bank of Australia hiking rates for a second straight month on Tuesday, citing the Middle East war.

However, many economists like Ed Yardeni, president of Yardeni Research, highlight the resilience of the US economy in previous shocks as reason to be bullish.

“The economy’s resilience means that oil price shocks cause far less persistent inflation and much less severe growth disruptions than in the past,” he said in a note to investors.

“Oil shocks are less likely to trigger the kind of sustained stagflation seen in the past, particularly during the 1970s.”

Crypto market movers

• Bitcoin is down 0.2% over the past 24 hours, trading at $74,042.
• Ethereum is trading sideways over the past 24 hours at $2,324.

What we’re reading

• Clarity at last? Ether, Solana, and XRP are commodities, SEC says in landmark interpretation of securities law — DL News
• Why Bitcoin rally risks fizzling out at $75,000 price ahead of Fed meeting despite Strategy’s buying spree — DL News
• World and Coinbase Launch Toolkit for Human-Backed AI Agents — Unchained
• How a Trump fan snagged $2m betting on president’s second memecoin gala dinner — DL News
• Annoyed with the price of Ethereum? Here’s what drives it, according to Bitwise — DL News

Lance Datskoluo is DL News’ Europe-based markets correspondent. Got a tip? Email him at [email protected].