The Federal Open Market Committee (FOMC) is set to conclude its two-day meeting on May 7, 2025, with significant implications for both the stock and cryptocurrency markets. Investors are closely watching to see whether the committee will maintain interest rates at 4.50%, cut rates, or increase them. As anticipation builds, market analysts are weighing the potential outcomes of the Federal Reserve’s decision and the subsequent press conference by Chair Jerome Powell, which is expected to provide further insights into the Fed’s monetary policy direction.

According to the CME FedWatch Tool, there is a 97% probability that the FOMC will opt to keep rates steady at 4.50%. This would mark the third consecutive meeting without a rate change, following the last reduction in December 2024, when rates were lowered from 5.5%. Powell previously justified the pause by citing the resilience of the U.S. economy, despite inflation remaining above the Fed’s target at 2.4% year-on-year.

However, if the FOMC decides to cut rates, it could lead to a surge in crypto prices, particularly Bitcoin (BTC), which analysts speculate might breach the $100,000 mark. Conversely, a rate hike or even a continuation of the current rates could adversely affect Bitcoin and other cryptocurrencies, pushing them down significantly. As the FOMC meeting approaches, Bitcoin is trading in a fragile yet critical zone, holding above the $92,900 support level.

Despite the prevailing bearish pressure, Bitcoin’s Directional Movement Index (DMI) indicates a notable shift. The Average Directional Index (ADX) has climbed sharply to 25.93, suggesting that volatility is returning, although the direction remains uncertain. Currently, Bitcoin is trapped below the Ichimoku Cloud, which reflects a market in consolidation with a slight bearish undertone. The price action is hovering near the Kijun-sen, indicating a lack of momentum to reclaim bullish strength.

Market expert Nick Purin believes that Bitcoin is well-positioned to reclaim the $100,000 mark, citing strong buying interest around the $90,000 to $93,000 range. He noted, “It will be a volatile week. Firstly, we have the FOMC meeting tomorrow. While it’s pretty clear there will be no rate cuts, it’s what Chair Powell says that could move the markets.” Purin also pointed out that historically, Bitcoin has posted gains during nine out of the last twelve Mays, which adds to the optimism surrounding its potential recovery.

In the days leading up to the FOMC meeting, Bitcoin bulls have shown resilience, with a bullish cluster of long positions forming around $94,400 in the futures market. This cluster mirrors previous bullish movements, pushing Bitcoin prices higher. Additionally, Bitcoin futures open interest has seen a significant increase, indicating sustained buying interest despite recent price dips.

As traders await the FOMC’s decision, the crypto market is also experiencing a notable shift in dominance. Bitcoin’s market share has surged to a fresh four-year high, surpassing 65%, as capital rotates from altcoins back into Bitcoin. This shift reflects a growing perception of Bitcoin as a safe haven asset amid macroeconomic uncertainty.

Joel Kruger, a market strategist at LMAX Group, described the current landscape as one of pause and anticipation, stating, “The cryptocurrency market has remained largely stagnant since the weekly open, with prices settling into a holding pattern as investors await a pivotal catalyst.” He emphasized that the FOMC decision on May 7 could serve as that catalyst, which may lead to increased volatility in the markets.

With inflation concerns looming, the Fed’s decision is further complicated by political pressure from figures like Donald Trump, who has advocated for rate cuts. However, experts caution that the Fed is likely to prioritize economic indicators over political considerations. Market analyst King Baldwin warned that if Powell adopts a hawkish tone regarding inflation, Bitcoin could see a drop to around $91,500 to $92,000. Conversely, any hints of future rate cuts could propel Bitcoin back toward the $100,000 threshold.

While the Fed is expected to maintain current rates, the sentiment surrounding the meeting is mixed. Some analysts predict that the market could react sharply to Powell’s comments, leading to significant price fluctuations in Bitcoin and other assets. As Bitcoin continues to navigate this critical juncture, the outcome of the FOMC meeting will likely shape its trajectory in the coming weeks.

In summary, the FOMC’s upcoming decision is poised to have far-reaching effects on both the stock market and the cryptocurrency landscape. As investors brace for potential volatility, the interplay between economic indicators, market sentiment, and Powell’s forthcoming statements will be crucial for determining the direction of Bitcoin and the broader market.