Bitcoin Surges Past $117K as Traders Eye Fed Rate Cuts and Powell’s Guidance

Bitcoin climbed above the $117,000 mark on Tuesday, its highest level in weeks, as traders positioned themselves ahead of the U.S. Federal Reserve’s widely anticipated interest rate decision. The move underscores how sensitive crypto markets remain to shifts in monetary policy, with investors weighing both the immediate impact of rate cuts and the longer-term trajectory for liquidity and risk appetite.

Crypto Markets Ride the Policy Wave

The price of Bitcoin (BTC) advanced nearly 3.4% in 24 hours, hitting an intraday peak of $117,450 before paring back slightly in late afternoon trading. Ethereum (ETH) also benefited from the momentum, rising to $3,180, while altcoins such as Solana (SOL) and Avalanche (AVAX) recorded gains between 2% and 4%.

Market analysts note that expectations of a 25 to 50 basis point rate cut are already priced in, but the tone of Chair Jerome Powell’s post-meeting press conference will be critical. A dovish signal could reinforce Bitcoin’s role as a high-beta risk asset, while a more cautious stance may trigger profit-taking after the recent rally.

Investor Sentiment Turns Cautiously Optimistic

Despite the bullish momentum, market positioning suggests a degree of caution. Data from derivatives exchanges shows that open interest in Bitcoin futures rose 8% over the past 48 hours, but funding rates remained moderate, implying leveraged traders are not yet chasing the rally aggressively.

“Bitcoin is once again moving as a liquidity barometer,” said Marcus Li, head of digital asset research at an Asia-based brokerage. “If the Fed confirms the start of a rate-cut cycle, crypto could see another leg higher. But if Powell signals concern about sticky inflation, the risk is a reversal back below $110,000.”

The Crypto Fear & Greed Index ticked up to 74, entering “greed” territory, reflecting improving sentiment. Still, traders remain mindful of the potential for volatility around macroeconomic announcements, with several billion dollars in leveraged positions at risk if the market swings sharply.

Macro Backdrop: Dollar Weakness and Liquidity Shifts

The dollar index (DXY) slipped to 102.4, its lowest level in three months, amplifying support for dollar-denominated assets like Bitcoin. At the same time, bond yields edged lower, with the U.S. 10-year Treasury yield retreating to 3.78%, signaling easing pressure on risk markets.

These dynamics have provided a tailwind not only for cryptocurrencies but also for equities, with the Nasdaq Composite gaining 1.6% on the day. Bitcoin’s correlation with tech stocks remains elevated, reinforcing its dual identity as both a speculative asset and, for some, a hedge against currency debasement.

Looking Ahead

The immediate test for Bitcoin will come from Powell’s remarks and the Fed’s updated economic projections. A clear signal of further cuts in 2025 could propel BTC toward the $120,000 resistance zone, while uncertainty may trigger a pullback. Beyond the Fed, attention will shift to U.S. jobs data and corporate earnings, both of which could shape investor appetite for risk.

For now, Bitcoin’s rally reflects a market leaning into the Fed’s pivot, but seasoned investors know that monetary policy can be a double-edged sword. A supportive environment could open the door to another record-setting run, yet the path forward is unlikely to be smooth.