Bitcoin holds steady as analysts expect Fed to maintain interest rates

Bitcoin hovered near $97,000 on Wednesday, with volatility holding below April's low as markets braced for the U.S. Federal Reserve’s rate decision.

The Volmex 30-day implied volatility index rose slightly to 48, up from 43 last week, according to The Block’s data. Derivatives markets reflected cautious positioning. Open interest for BTC futures climbed to $32 billion on Wednesday, a $2 billion increase since Monday, per CoinGlass. The figure remains below the $40 billion year-to-date peak set in January.

Traders maintain "directional exposure" to catch a move to either side after the FOMC outcome, Bitfinex analysts told The Block: "This time, traders aren’t preempting a policy pivot — they’re instead preparing for binary volatility depending on Powell’s tone."

Dr. Kirill Kretov, senior automation expert at CoinPanel, echoed the sentiment, saying market analysis painted a wait-and-see picture.

"It’s a positioning regime defined more by caution than conviction, with the derivatives market reflecting structural trades rather than directional aggression," Kretov shared with The Block. "There’s little sign of hedging downside, nor are traders leaning too far into bullish risk-repricing."

1% chance of a Fed rate cut

Following last week’s U.S. macro data releases, some observers called for a rate cut from the Federal Reserve. U.S. GDP shrank and inflation came in flat, spurring shouts for a dovish Fed pivot.

Katalin Tischhauser, head of research at Sygnum Bank, said this outcome is unlikely. She pointed to tariff-driven inventory shifts skewing GDP data, while sticky inflation complicates any case for a cut.

"The negative reading is therefore unlikely to spur the Fed into action,” Tischhauser argued. "On the other hand, the higher-than-expected PCE inflation pre-Liberation Day is likely to make the Fed even more cautious, especially as consumer surveys also indicate substantial concerns about inflation. The likelihood of rate cuts before the 30 July FOMC meeting is now low (near zero basically)."

The CME FedWatch tool priced a 99% chance of no change. Market consensus suggested the Fed will maintain the 4.25% to 4.5% interest range, despite public nudging from President Donald Trump toward Federal Reserve Chairman Jerome Powell. K33 Head of Research Vetle Lunde and senior analyst David Zimmerman noted this outcome could trigger volatility in Bitcoin and other cryptocurrencies.

"The FOMC is rigged to cause significant volatility this week,” Lunde and Zimmerman asserted. "Since the last FOMC, Trump has attempted to pressure Jerome Powell into emergency rate cuts. Despite this pressure, broad market consensus points toward unchanged rates against the backdrop of tariff-induced uncertainty in the market."

CME Group

Likelihood of Rate Cut at May 7 FOMC

US-China tariff negotiations

Hours before the meeting, Bitcoin was up nearly 3% and flirted with the $97,300 level, according to The Block’s price page. The rise followed overnight headlines of discussions between China and the U.S. regarding a potential trade deal.

While the Fed may or may not consider this development, Valentin Fournier, lead research analyst at BRN, opined that an agreement would be a boon to BTC and risk assets.

"A deal could materialize soon, removing a key headwind for global trade and risk assets,” Fournier said in a daily note. "This thaw in tensions is a tailwind for Bitcoin and other digital assets, which often benefit from a more open, risk-friendly macro environment."