Bitcoin value at a critical juncture as investors anticipate Federal Reserve announcement today.

Bitcoin surged past $117,000 during the early hours of trading today, marking its highest point since early August, as traders adjusted their positions in anticipation of the Federal Reserve’s interest rate announcement.

The results of the Federal Open Market Committee (FOMC) meeting, scheduled for later today, will shape the risk environment for the remainder of the year.

Market speculation regarding a more accommodative monetary policy has driven the recent momentum.

A report from Bitwise indicates that softer inflation data in the US has led futures markets to fully incorporate a quarter-point rate reduction, with nearly 93% likelihood that total cuts will amount to 75 basis points by year-end.

Consequently, the expectation of more lenient conditions has invigorated crypto markets, with Bitwise noting “a return to slightly bullish sentiment” as market risk appetite becomes increasingly apparent.

This assessment aligns with that of blockchain analytics platform Santiment, which observed a rise in bullish sentiment across social media platforms like X.

Santiment reported that bullish discussions now constitute 64% of all crypto-related conversations, representing the highest “crowd greed” index since July.

Bitcoin Bullish Social Media Sentiments (Source: Santiment)

Additionally, the influx of stablecoins into exchanges indicates that actual capital is ready to take advantage of market movements.

CryptoQuant analyst Axel Adler noted that approximately $9 billion in stablecoins have flowed into exchanges over the past 36 hours in advance of the upcoming Fed meeting. This implies that traders are poised to respond swiftly to the announcement.

Stablecoins Exchange Flows (Source: CryptoQuant)

Caution ahead

Nevertheless, despite the prevailing bullish sentiment, Santiment cautioned that markets frequently move contrary to retail consensus, suggesting that excessive optimism could leave traders vulnerable if the Fed’s decision is unexpected.

Blockchain analysis firm Glassnode also highlighted that the derivatives markets exhibit similar tension, as options traders are actively preparing for potential price fluctuations.

According to the firm:

“Options traders are swiftly acquiring options to hedge or position for a volatility spike, reflecting the market’s uncertainty and anticipation of a significant move.”

Bitcoin Options Trader Market Positioning Ahead of FOMC (Source: Glassnode)

In light of this, Timothy Misir, head of research at BRN, informed CryptoSlate that “Bitcoin is at a pivotal point.”

He stated:

“A sustained breakthrough of $116,300 and $117,000 driven by Fed liquidity could open the door to higher levels approaching $120,000. However, the situation is fragile. Weak conviction in key areas, concentrated liquidation clusters, and increased geopolitical risks mean the market is just one headline or one comment from Powell away from a downward shift.”

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