Four Bitcoin Price Scenarios Based on the Fed's Decision to Adjust Interest Rates

On May 7, 2025, the Federal Open Market Committee (FOMC) will wrap up its two-day meeting, making a key decision that could have an impact on both the stock and cryptocurrency markets. The focus will be on whether Jerome Powell and the FOMC choose to adjust interest rates.

May 7, 2025, will see the Federal Open Market Committee (FOMC) conclude its two-day meeting with a key decision that could influence both the stock and cryptocurrency markets. The focus will be on whether Jerome Powell and the FOMC will adjust interest rates.

According to the CME FedWatch Tool, there is a 97% chance that the FOMC will maintain the interest rates at 4.50%. This will mark the third consecutive meeting without any adjustments since the previous cut in December 2024 from 5.5%.

As the FOMC press conference draws near, Bitcoin has displayed strength, reaching a high of $97,600 before a slight pullback today.

Four Bitcoin Scenarios Based on Fed’s Decision

According to Santiment, there are four possible outcomes for Bitcoin’s price based on the Federal Reserve’s decision on interest rates:

If the Federal Reserve reduces interest rates, it could have a positive impact on Bitcoin’s price. Lower rates tend to encourage people to invest in higher-risk assets like cryptocurrencies in search of better returns. This shift in investment preference could attract additional funds toward Bitcoin, ultimately driving up its price.

If this scenario unfolds, we could witness a substantial surge in Bitcoin’s value. As of late, Bitcoin encountered resistance around the $97,600 mark, which could serve as an indicator for further price increases. If Bitcoin manages to close above the $98,000 level, it could quickly escalate toward $102,000 and potentially reach new all-time highs.

If the Federal Reserve maintains the interest rates at their current level, it might not have a significant impact on Bitcoin’s price.

Moreover, with no substantial changes in macroeconomic conditions, the market could remain stable for a period of time, and Bitcoin’s price is likely to stay within its current range of $93,399 and $97,600.

If the Federal Reserve decides to raise interest rates, it could have a negative impact on Bitcoin’s price. Higher interest rates make traditional investments like savings accounts and bonds more appealing, leading to a shift in investment focus away from riskier assets like Bitcoin.

This shift in investment preference could result in a decrease in Bitcoin’s price. The first support level is located at around $93,800, while stronger support levels are at $92,000 and $88,000.

Even if the Fed cuts interest rates, the market might not react the way people anticipate. Sometimes, a rate cut can be a sign that the economy is not doing well, and people might start to worry about inflation, even if it’s not a big concern yet.

If this happens, Bitcoin might not go up like usual. Instead, it could have trouble making gains and might even go down a little in the short term.