Bitcoin (BTC) experienced daily lows on May 3rd, as markets awaited the Federal Reserve’s interest rate decision. Data from various sources showed BTC/USD reaching $28,152 on Bitstamp, down 2.2% from the day’s highs. The pair continued to be volatile into the May 3rd meeting of the Federal Open Market Committee (FOMC), the event that accompanies interest rate adjustments.
Federal Reserve Interest Rate Decision
Market sentiment has priced in a 90%+ chance of the Federal Reserve hiking 0.25% to copy its March moves, with little expectations of a surprise instead. The odds of the hike materializing stood at 83% at the time of writing, around 15% lower than the previous day. However, the Fed would be hiking into a banking crisis exacerbated by already high interest rates.
Banking Crisis and Bitcoin
Multiple United States regional bank stocks fell considerably the day prior to the Fed meeting, raising concerns that the crisis has gone nowhere. Despite the banking angst, Bitcoin remained aloof, failing to capitalize on sentiment and remaining firmly within an established trading range. Fellow traders predicted a downside target of around $25,000 for their next potential trade, while others offered two zones closer to the spot price at which they would “pull the trigger.”
Decreasing Volume a Warning Sign
Firm bullishness was hard to find among commentators, with trader Justin Bennett noting decreasing volume as a telltale warning sign of flagging upside potential. “I’d love to know how so many believe Bitcoin will reach $100k or even $50k this year when volume looks like this,” he argued on May 2nd. “A rally on decreasing volume = exhaustion.” The lack of attention to what’s happening in the banking system is concerning, and it remains to be seen what the Federal Reserve will do to address the ongoing crisis.