Fed Rates Could Cause a Bitcoin Price Crash This Week – Here’s Why

Bitcoin, the world’s largest cryptocurrency, took a hit on Monday, dropping to $83,191 after a week of steady losses. With the market already on edge, all eyes are now on the U.S. Federal Reserve’s upcoming interest rate decision.

Will the Fed’s announcement bring relief to Bitcoin or push it even lower?

Most analysts expect the Fed to keep interest rates unchanged, just as it did in January. Since Bitcoin often leads the broader crypto market, this decision could have a major impact on prices.

Will the Fed Hold Rates Steady?

The Fed’s policy meeting on March 18-19 will cover February’s economic data. According to the CME Group’s FedWatch tool, there is a 98% chance that rates will stay the same.

Bitcoin’s next move depends on how it holds up at key price levels:

• Above $81,000: If Bitcoin stays above this level by the weekly close, it could signal strength.
• Below $76,000: Dropping below this could trigger more selling pressure.
• Above $85,000-$90,000: A strong close in this range could boost confidence and potentially spark a rally.

How the U.S. Dollar Affects Bitcoin

The U.S. dollar is playing a crucial role in Bitcoin’s price movement. The Dollar Currency Index (DXY) has been falling, which usually helps riskier assets like crypto. A weaker dollar often pushes investors toward alternative assets, including Bitcoin.

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Global Liquidity and the Fed’s Impact

Besides interest rates, global liquidity is another key factor. Central banks worldwide, including the Fed, have been increasing the money supply to support their economies. More liquidity generally pushes asset prices higher, including stocks, real estate, and crypto.

If the Fed signals an end to its efforts to tighten the money supply, the crypto market could react positively.

Ethereum and Altcoins Struggle

Ethereum (ETH) has been under pressure, losing 9% in a week. It is now trying to stay above $1,900 and push back toward $2,000. Another concern is Ethereum’s declining user activity, with daily active users dropping from over 700,000 earlier this year to just 293,000.

Other major altcoins, including Solana (SOL), XRP, Cardano (ADA), and Tron (TRX), have also seen sharp declines. Many experts believe a future Fed rate cut could spark a strong recovery for the crypto market.

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