Bitcoin dips back below $75,000 on the eve of the Federal Reserve decision

As the Federal Reserve (Fed) interest rate meeting (FOMC) approaches its conclusion, Bitcoin briefly broke through the $75,000 mark on Tuesday, but the rally failed to continue, and prices quickly fell back below $74,000, reflecting investors’ cautious attitude toward high-risk assets ahead of the monetary policy announcement.

The Fed’s statement is scheduled to be released at 2 p.m. Eastern Time on March 18 (which is 2 a.m. Thursday, March 19, Taiwan time), followed by a press conference from Chair Powell. Analysts note that stable employment growth, retail sales, and ongoing inflation driven by rising oil prices due to Middle East tensions have raised the bar for rate cuts, potentially delaying the earliest possible rate cut to September or October. Powell’s remarks after the meeting will be crucial, as he will provide updates on the “dot plot” and clues about the committee’s outlook for limited rate cuts throughout the year.

Bitcoin’s recent upward movement has been partly supported by short-term market squeezes over the past two weeks. The options market initially held large hedging positions, and the funding rates for perpetual contracts remained persistently negative, indicating a market structure that was “bearish, hedged, and under-hedged.” Under these conditions, any upward breakout easily triggers short covering, amplifying short-term gains.

However, the $75,000 level remains a significant resistance zone. Although Bitcoin briefly surpassed this level early Tuesday, the breakout was short-lived, and prices quickly retreated below $74,000.

Energy Market Heating Up Becomes a Resistance to Bitcoin’s Further Rise

Compared to technical resistance alone, what concerns the market more is the potential resurgence of inflation driven by geopolitical tensions and energy prices. Since the outbreak of conflict in Iran, Bitcoin has shown strong momentum, but activity in on-chain energy and commodity markets has been even more prominent. Notably, on the decentralized perpetual contract trading platform Hyperliquid, trading in oil-related futures has significantly increased, indicating that capital is shifting toward energy and raw material narratives.

Refined energy products like gasoline and heating oil have better Sharpe ratios, tighter spot supply and demand, and favorable term structures. If oil prices continue to rise, the market will likely allocate more funds to assets benefiting from inflation and supply risks rather than chasing risk positions in cryptocurrencies.

Market Bets on Fed Holding Steady, but Rate Cut Expectations Are Delayed

Currently, the market widely expects the Fed to keep rates unchanged this week, but investors’ focus has shifted from “Will they cut rates?” to “When will they cut rates?” Recent reports, including from Reuters, indicate that due to rising energy prices and inflation risks from Middle East tensions, Wall Street institutions have been pushing back the timing of the first rate cut this year. Market expectations for rate cuts in 2026 have also become more conservative.

Market Pricing Reflects High Confidence in Status Quo, with Over 90% Probability of Rates Remaining Unchanged

Due to geopolitical risks pushing up energy costs and persistent inflation data, the probability of three rate cuts by the end of 2026 has dropped from nearly 50% last week to around 20-30%. Traders are watching the updated Federal Economic Projections (SEP) and the dot plot for signs of a shift toward a more hawkish stance; even small adjustments by FOMC members could signal “no rate cuts for the rest of the year.” A key focus is the 2-year U.S. Treasury yield, which could spike if the language becomes more cautious, putting pressure on high-valuation tech stocks.

This macro environment is not entirely bearish for Bitcoin but suggests that valuation expansion will be limited in the short term. If oil prices continue to rise and inflation expectations heat up, the Fed may maintain a wait-and-see stance longer, slowing the rebound of risk assets. While Bitcoin has performed steadily, a “rapid surge” in the near future may not be so easy.

Technical Outlook Remains Strong, but Market Has Not Confirmed a Breakout

In the short term, the market’s structure does not indicate a shift to bearishness for Bitcoin. Analysts point out that Bitcoin’s recent approach to $75,000 was driven mainly by strong technical signals and derivatives market liquidations, with the breakout on that day triggering about $124 million in liquidations, further boosting the rally. However, many market observers believe that current price action resembles a high-level consolidation rather than a confirmed new breakout, and the $75,000 level has yet to be firmly established.