Bitcoin Price Forecast: BTC steadies around $105,000 ahead of Fed decision, possible US involvement in Israel-Iran conflict
- Bitcoin price hovers around $105,000 on Wednesday, following a 2% drop the previous day.
- Traders' focus shifts to the US Fed's interest rate decision, which could bring volatility to risky assets, such as BTC.
- Risk sentiment stabilizes despite US President Trump considering options for US military action against Iran.
Bitcoin (BTC) hovers around $105,000 at the time of writing on Wednesday, following a 2% drop the previous day. Traders' are waiting for the US Federal Reserve (Fed) interest rate decision due later in the day, which could bring volatility to risky assets, such as BTC. Meanwhile, the risk sentiment stabilizes despite US President Donald Trump considering options for US military action against Iran.
Bitcoin could face volatility following the Fed's interest rate decision
Bitcoin investors' attention shifts to the Fed’s interest rate decision on late Wednesday.
Dhwani Mehta, Senior Analyst at FXStreet, reports that the Fed is likely to keep the federal funds rate steady in the range of 4.25%-4.50%, reiterating its prudence in the policy outlook.
The analyst further explains that the central bank’s quarterly projections on growth, inflation and potential rate cuts by year-end, will hold the key to altering markets’ expectations of rate cuts this year. Markets wait for the Fed to continue to predict two 25-basis-points (bps) rate reductions in the second half of this year, setting to resume its rate-cutting cycle from September, according to the CME FedWatch tool.
If the bank's statement on Wednesday sounds more cautious or signals a dovish stance, it may lower interest rates. This could be a bullish case for riskier assets, such as BTC, as lower rates could increase the purchasing power of investors and prompt them to shift toward riskier assets. However, if the Fed has a hawkish stance, it could have a bearish effect on the BTC price.
Iran-Israel uncertainty renders Bitcoin investors cautious
Bitcoin price dipped on Tuesday, reaching a low of $103,371, amid escalating tensions in the Middle East.
The six-day-old war between Iran and Israel that started last week took a new turn on Tuesday as US President Donald Trump said on social media that the US knew the location of the country’s leader but was choosing not to take any action and then added, “UNCONDITIONAL SURRENDER!”, reports Wall Street Journal.
Moreover, Israeli Channel 12 media outlet reportedly said on Tuesday that the US could join the war against Iran that same night.
So far, the US has not taken any military action against Iran, hinting at some sign of relief for investors.
However, traders should still remain cautious, as any further escalation of ongoing tensions could disrupt stability in global risk markets.
Some signs of optimism
Despite the war uncertainty, there are some signs of optimism for Bitcoin. The US Senate passed the GENIUS bill on Tuesday and now awaits final deliberation in the House before it can move on to the President's desk.
The US Senate’s decision on a stablecoin regulatory bill marks a milestone for the crypto industry. This decision has a positive outlook, as it helps establish a legal framework for stablecoins, which could enhance their legitimacy and facilitate wider adoption. Additionally, this could also boost the stablecoin market capitalization, which is considered the gateway to crypto and has a positive correlation with Bitcoin price.
According to SoSoValue data, US spot Bitcoin Exchange Traded Funds (ETFs) recorded an inflow of $216.48 million on Tuesday, continuing its seven-day streak of gains since June 9.
Total Bitcoin Sport ETF net inflow daily chart. Source: SoSoValue
Bitcoin Price Forecast: BTC could dip further if it closes below its 50-day EMA
Bitcoin price declined sharply, falling from the June 10 close of $110,274 to the June 11 close of $105,671, creating a Fair Value Gap (FVG) at approximately $108,064. This bearish FVG marks a key resistance zone, meaning that once Bitcoin collects liquidity, it is likely to continue its correction.
On Monday, BTC retested and faced a slight pullback from this FGV zone, closing the day up by 1.14%. However, it declined by 2.10% the next day and retested its 50-day Exponential Moving Average (EMA) around $103,070. At the time of writing on Wednesday, it hovers at around $105,000.
If BTC continues its correction and closes below the 50-day EMA at $103,070 on a daily basis, it could extend the decline to retest its key psychologically important level at $100,000.
The Relative Strength Index (RSI) momentum indicator on the daily chart has slipped slightly below its neutral level of 50, indicating increasing bearish momentum. The Moving Average Convergence Divergence (MACD) indicator on the daily chart displayed a bearish crossover last week. It also shows rising red histogram bars below its neutral level, indicating bearish momentum and giving credence to the downward trend.
BTC/USDT daily chart
On the contrary, if BTC closes above its FVG level at $108,064, it could extend the recovery toward retesting its May 22 all-time high of $111,980.
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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