The bitcoin price has dropped 3% in morning trading, hovering around $77,000, as investors exercise caution ahead of the Federal Reserve's rate decision and upcoming economic data releases, including GDP and inflation figures. Market maker Enflux notes that traders are hesitant to drive the price higher due to uncertainty surrounding the Fed's decision and the impact of oil prices on inflation.
With Brent crude remaining above $100, the inflation outlook is complicated, making it challenging for the Fed to send a dovish signal. Enflux highlights two competing assumptions in the market: that geopolitical tensions will eventually ease, but not quickly enough to influence near-term policy, resulting in a more ambiguous backdrop for risk assets.
As a result, bitcoin has struggled to break above key technical levels, trading roughly 4% below its short-term holder cost basis. A clear signal from the Fed that oil-driven inflation is temporary would be necessary for bitcoin to move decisively above this level. Meanwhile, a less visible force, the slowdown in AI demand, may also shape bitcoin's next moves. Listed BTC mining companies have taken on significant debt to pivot to hosting AI data centers, but a slowdown in AI growth could ease miner-driven selling over time.
However, this relief would likely come later, as sell pressure on semiconductor and data stocks due to weaker tech and risk appetite would initially bring down the crypto market. The AI story adds another layer of uncertainty, keeping bitcoin trading in a narrow band as investors wait for a clearer signal.