As the Federal Reserve convenes this week, the cryptocurrency market is closely monitoring signals that could influence Bitcoin‘s (CRYPTO: BTC) trajectory.

With the Fed expected to maintain its benchmark interest rate at 4.25%–4.50% on Wednesday, attention turns to Chair Jerome Powell’s commentary for indications of future monetary policy shifts.

Economic indicators, including a recent negative GDP print and softening inflation, have intensified speculation about potential rate cuts later this year.

Speaking with Benzinga, Rohan Misra, Head of GCC at AMINA Bank, suggests that the Fed may adopt a more dovish tone, stating, “The Fed may prepare the ground for future cuts,” which could be “supportive for Bitcoin price action.”

Market expectations align with this sentiment, with a 54.4% probability of a rate cut by July and over a 50% chance of three or four cuts by year-end, according to CME Group’s FedWatch tool.

Matt Mena, Crypto Research Strategist at 21Shares, notes that “core PCE just hit its lowest since June, and GDP contracted last quarter,” highlighting the economic backdrop influencing these expectations.

In anticipation of a more accommodative monetary policy, institutional investors have significantly increased their exposure to Bitcoin.

U.S.-listed Bitcoin ETFs have seen over $4 billion in inflows this year, with nearly $2 billion arriving last week alone.

Also Read: BNB Price To Surge To $2,775 By 2028, Driven By Bitcoin And Ethereum Correlation, Says Standard Chartered

BlackRock’s Bitcoin ETF alone attracted $530 million, underscoring the growing institutional interest.

This influx of capital has contributed to Bitcoin’s resilience, with the cryptocurrency trading around $94,000 despite broader market volatility.

Chuck Zhang, CFO at PolyFlow, observes that “Bitcoin’s current price near $94,000 reflects cautious optimism,” suggesting that a dovish Fed stance could encourage a “risk-on” mindset and lift Bitcoin above $95,000.

Adding to the bullish outlook, reports indicate that Tesla has added Bitcoin back into its website code for payments, hinting at a potential resumption of Bitcoin transactions.

This development, coupled with a more accommodative Fed policy, could further bolster Bitcoin’s appeal among institutional investors.

However, not all analysts are uniformly optimistic.

Azeem Khan, co-founder of Miden blockchain, points out that “we’re seeing signs that Bitcoin is separating from altcoins and even from equities,” suggesting that Bitcoin’s performance may increasingly diverge from other asset classes.

As the Fed’s decision looms, the cryptocurrency market remains poised for potential volatility.

A dovish shift could propel Bitcoin toward the psychological $100,000 mark, while a more hawkish stance might apply downward pressure.

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