How Will Bitcoin and Gold Move Amid Dovish US Fed Monetary Policy Outlook?

Bitcoin price is again under selling pressure as the US Federal Reserve prepares for its first FOMC under Donald Trump administration. After facing rejection at $103.5K, BTC looks to retest the lows under $100K. However, if US Fed Chair Jerome Powell announces a dovish monetary policy outlook on Wednesday, BTC and altcoins could see a strong revival ahead.

Meanwhile, Gold continues to extend the rally, up by 37% on the yearly chart and is less than 1% from its record highs. The demand for safe-havens rises as investors brace for volatility during the Fed interest rate decision.

Bitcoin Price Shows Weakness on Charts

Crypto analyst Ali Martinez has highlighted a bearish signal for Bitcoin (BTC) using the TD Sequential indicator. According to Martinez, the indicator has flashed a sell signal on the hourly chart, suggesting BTC could revisit recent lows of around $99,000 in the near term.

As shown in the below chart, the crypto analyst expects the Bitcoin price to bounce back to all-time highs, after taking a support at $99,000. He points to expectations of a dovish stance from the Federal Reserve in its upcoming announcement. In his post on the X platform, Martinez noted:

“The market dumping right before the FOMC meeting feels like manipulation. If the Fed signals a dovish outlook tomorrow, BTC could rally on expectations of looser monetary policy. Still, the Fed is currently expected to keep rates steady at 4.25%-4.5%, with the CME FedWatch Tool showing a 97.3% probability of no change”.

On the other hand, Gold continues to extend its gains, now at over 37%, in the last 12 months. Gold prices are soaring, approaching $2,800 per ounce, with year-to-date gains nearly doubling the returns of the S&P 500. In the case of the US Fed taking a dovish stand, the yellow metal could rally to its all-time highs ahead.

US Fed’s FOMC Meeting on Radar

The DeepSeek scare shook Wall Street earlier on Monday, triggering a massive $1 trillion rout in US chip companies. Although the S&P 500 recovered partially on Tuesday, the FOMC meeting will play a crucial role in deciding the next line of action for the market.

US President Donald Trump has requested an immediate interest rate cut, however, considering the sticky inflationary scenario, US Fed Chair Jerome Powell might decide to delay this decision further.

In late 2024, the Federal Reserve initiated a series of interest rate reductions, starting with a significant 50 basis point cut in September. This was followed by smaller reductions in November and December, bringing rates to a range of 4.50%-4.75%. Projections for 2025 suggest additional rate cuts, potentially totaling another 50 basis points.

BTC Whales Are Accumulating

According to a recent analysis by CryptoQuant, Bitcoin inflows to whale wallets have significantly increased, signaling a phase of accumulation. The trend suggests these inflows are likely originating from over-the-counter (OTC) trades, as large investors position themselves in the market. This could serve as an additional catalyst for the future Bitcoin price rally.

Furthermore, analysts believe that the bull market conditions are not yet over. The bull run aligned with growing participation from U.S.-based entities, including exchanges, banks, and funds, in the cryptocurrency market. The share of Bitcoin holdings by U.S. entities continues to climb, outpacing the holdings of non-U.S. entities, reported CryptoQuant.

Currently, BTC price trades near $102,500, rebounding from a 24-hour low of $100,160. Furthermore, the trading volume has decreased by 45% in the last 24 hours, indicating a decline in interest among traders.