Bitcoin holds 115K, but can it break higher after tomorrow’s Fed rate decision?

Bitcoin is holding steady above 115k as the mood turns cautious ahead of the Federal Reserve interest rate decision tomorrow. Other major cryptocurrencies such as Ethereum, Solana, and XRP are also unchanged on the day. However, there are pockets of strength with Avalanche and Polkadot rising 2%. The total cryptocurrency market capitalization has risen 0.3% over the past 24 hours to $4.01 trillion. 

Bitcoin rallied 5% last week, after data showed signs of weakness in the US jobs market, fuelling Federal Reserve rate cut expectations. This week, the mood has turned more cautious as the Fed’s two-day monetary policy meeting kicks off and ahead of the rate decision tomorrow. 

What to expect from the FOMC rate decision 

The Fed is expected to cut rates by 25 basis points to 4.00% - 4.25%, after a nine-month pause and a move that has already been priced into the market. Therefore, the focus will be on the Fed’s projections for growth and inflation and the dot plot. The market is pricing in almost three 25-basis-point rate cuts before the end of the year. The Fed’s dot plot from the June meeting showed the median expectation from policymakers was for 50 basis points of cuts this year. Investors will be watching closely to see whether the Fed increases its medium expectations to three rate cuts. 

Could BTC’s upside be limited? 

A lower interest rate environment is beneficial for risk assets such as Bitcoin due to increased liquidity. While Bitcoin may see some upside on a dovish rate cut, this could be limited as capital is rotating into equities and altcoins.  

US stocks are trading at record levels. The Nasdaq has rallied 50% from its April low to hit a record high. Meanwhile, BTC appears stuck some 7% below its 124k ATH. 

Altcoins have been stealing the show in recent weeks. Bitcoin dominance has fallen to 57%-58% and the TOTAL2 (crypto market cap minus Bitcoin) rose to a record high of $1.74 trillion last week. The Altcoin Season Index has also jumped to 80, its highest level since January.  

Major altcoin narratives are picking up and prices of some coins have soared. Both Ethereum and Solana have seen significant gains recently, boosted by institutional interest and Digital Asset Treasury Companies (DATs).  

Due to the strong interest in equities and altcoins, Bitcoin may struggle to reach 120k even after a dovish Fed cut. 

BTC technical forecast 

Bitcoin extended its recovery from the 107.2k September low, rising above resistance at 112k and the 50 SMA to a peak of 116.8k. The price has eased back slightly and is consolidating above 115k and the 50 SMA, which, along with the RSI above 50, keeps bulls hopeful of further gains. 

Buyers will look towards 120k as the next level of resistance before bringing 124.4k and fresh all-time highs into focus. 

Immediate support is at 114.3k, the 50 SMA, and below, 110k comes into play. It would take a break below 107.2k to create a lower low. 

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