Possible Outcomes for the Upcoming FOMC Decision

The upcoming decision from the Federal Open Market Committee on May 7 will mark a significant moment for Bitcoin traders, as it may set the course for market movement throughout the summer. It is widely expected that the Federal Reserve, led by Chair Jerome Powell, will keep interest rates steady at 4.25 to 4.50 percent, with a 98.2 percent likelihood of no change according to the CME Group’s tools. Despite this high probability, political pressures remain present.

Both President Donald Trump and Treasury Secretary Scott Bessent have advocated for decreased borrowing rates. However, Powell’s latest comments on April 16 described the monetary stance as being in a “wait-and-see” phase. He acknowledged that the labor market is in relatively good health but stressed that the Fed’s priority is to maintain stable long-term inflation expectations and prevent a one-off increase in price levels from evolving into a continuing inflation issue. Thus, the central bank remains focused on price stability, even as leading indicators suggest a slowdown in the economy and a possible shift toward easing later in the year.

FOMC Outlook for Bitcoin

For Bitcoin, the key issue is not whether the Fed will alter its course but rather how algorithm-driven liquidity and discretionary trading will respond to Powell’s press conference. Trader Josh Rager shared with his followers that they should expect fluctuations leading up to the FOMC meeting, followed by increased volatility after rate decisions are announced, with a potential reversal during Powell’s remarks. Rager anticipates a future rate reduction but is presently focused on short-term price movements during the statement and Q&A session.

Astronomer (@astronomer_zero) introduced a more probabilistic approach, noting that his reversal model has previously shown an 85 percent accuracy rate for predicting reversals. He suggested that, if patterns remain consistent this month, Bitcoin might have peaked in recent days, leading to a significant downward movement.

However, he warned that the current upward trend in Bitcoin may dilute these signals, indicating that the anticipated reversal effects from upcoming FOMC meetings might weaken amid ongoing bullish trends.

He anticipates a 76 percent likelihood that Bitcoin will rise from current levels and that any reversal from the FOMC announcement may be overlooked, with a 24 percent chance of a modest pullback within set loss boundaries.

Columbus (@columbus0x) is analyzing the situation from a microstructure angle, referencing a heat map of liquidations. He foresees a possible dip into a highlighted lower price box, which coincides with the 0.382 Fibonacci retracement level from the previous significant swing low.

If Powell adopts a hawkish tone, Columbus predicts a fall below the current range or a test of the 200-day moving average, closing the gap between $91.8k and $92.4k, or even slipping into the high $80k range. Nevertheless, the prevailing trend remains upward.

Momentum indicators provide an additional perspective, with Titan of Crypto commenting that Bitcoin is currently stabilizing between last week’s high and low in anticipation of the FOMC meeting and Powell’s statements. The daily MACD is showing a bearish crossover, indicating a slowdown in momentum. A confirmed decline in the histogram would align with the modest pullback scenario mentioned by previous analysts, but the longer-term trend remains positive.

When all aspects are considered, the decision expected tomorrow may seem binary; however, the real influence lies in Powell’s forward guidance and its implications for terminal rate expectations. If he emphasizes a cautious approach amid acknowledging slowing data, the market could begin to anticipate a possible cut in June, providing a favorable backdrop for bullish positions.

On the other hand, any indication of renewed caution concerning inflation might encourage short-term bears looking for liquidity below $92k. Regardless, the market has limited room for complacency: liquidity is tight, options gamma is focused around the significant $100,000 mark, and the narrative surrounding an easing cycle in the latter half of 2025 is directly opposing the current inflation strategy of the Fed.

At the time of this report, Bitcoin is priced at $94,097.