Bitcoin (CRYPTO: BTC) remains highly sensitive to Federal Reserve policy shifts, with analysts closely watching Fed Chair Jerome Powell's guidance on interest rates.

What Happened: In an X post on Wednesday, crypto chart analyst Ali Martinez predicts the Fed to almost certainly hold interest rates steady today (99% probability per CME FedWatch).

Traders are focused on Chair Jerome Powell's outlook for future rate cuts, inflation trends and broader monetary policy shifts.

Market expectations for rate cuts later in 2025 remain, but uncertainty lingers.

The Fed previously projected two rate cuts for 2025, with markets currently pricing a 66% chance of a cut in June.

Inflation has cooled to 2.8%, but long-term expectations remain high at 3.9%, keeping pressure on the Fed.

Trump's proposed tariffs could further complicate inflation and future rate decisions.

Also Read: Bitcoin Drops 16% In A Month: Are Bear Market Signals Flashing?

What's Next: Assuming various base case scenarios on what will the Fed announce, Ali Martinez predicts the following:

Baseline Expectation: Rates remain unchanged, and Powell's tone determines the market reaction.

Hawkish Stance: Emphasis on persistent inflation could lead to a Bitcoin and risk asset pullback.

Dovish Stance: Signals of future easing could trigger a rally, potentially pushing Bitcoin toward $90,000.

Surprise Rate Cut (Unlikely): A shock move would fuel a strong risk-on rally.

Martinez concluded that a breakout above $85,000 signals bullish momentum, while a drop below $80,000 could deepen corrections.

Powell's forward guidance will shape liquidity conditions and influence Bitcoin's trajectory.

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Image created using artificial intelligence with Midjourney.