Bitcoin Price Prediction as Fear & Greed Index Drops Pre-FOMC

Key Insights

• Bitcoin price has stalled at the $78,000 resistance level.
• The FOMC will deliver its interest rate decision on Wednesday.
• Spot Bitcoin ETFs have continued adding assets this year.

Bitcoin price maintained a steady position above the critical $77,000 level on Sunday. Traders now await the upcoming FOMC interest rate decision and updates on the US-Iran ceasefire. BTC was trading at $78,000 on Sunday, up sharply from the year-to-date low of $60,000.

FOMC Interest Rate Decision Key catalyst for the Bitcoin price

A key catalyst for the Bitcoin price will be Jerome Powell’s farewell decision on Wednesday this week. This decision comes at a time when the economy is facing substantial challenges, including elevated inflation.

The latest macro data shows a significant increase in inflation. The headline consumer price index rose from 2.4% in March to 3.3% in April.

This inflation will likely continue rising this year as energy prices continue rising because of the ongoing war in Iran. Brent, the global benchmark, rose to $105, while the West Texas Intermediate (WTI) rose to $95.

This will be Jerome Powell’s final decision as the Fed Chair. However, it is still unclear whether he will continue staying at the Federal to complete his term. Leaving the Fed will be bullish as it will have Trump appoint another Fed official to the bank.

The Fed decision comes in a week when the US will publish key macro data. This will provide hints about the US economy. Some of the top data to watch will be the US consumer confidence, GDP, and housing starts.

Institutional Demand for Bitcoin ETFs is Rising

Meanwhile, demand for spot Bitcoin ETFs is rising. Data compiled by SoSoValue shows that these funds added over $14 million on Friday last week. This brought the total inflows last week to $823 million.

The funds had added $996 million in the previous week. They have now added over $2.4 billion this month, bringing the total inflows to over $58.2 billion. Their holdings are now worth over $102 billion, with IBIT having the biggest market share in the industry.

The most recent Morgan Stanley Bitcoin ETF (MSBT) has gained $192 million in assets since its launch earlier this month. It has already passed the WisdomTree BTCW, which has $174 million in assets.

Spot Bitcoin ETFs have added over $3.72 billion in assets in the past two months. This offset the $6 billion outflows experienced in the previous four months.

The same is happening in the futures market, with the open interest continuing the uptrend in the past few weeks. Open interest has jumped to over $60 billion from a low of over $40 billion a few years ago.

At the same time, Bitcoin whales have continued boosting their holdings in the past few weeks. It’s a sign that they expect the price to eventually come back in the near term.

Bitcoin Price Prediction: Rally Losing Momentum?

The three-day timeframe chart shows that the Bitcoin price has held steady in the past few weeks. It has risen from a low of $60,000 in February to $78,000 today. It is now hovering at an important resistance level where it has failed to move above several times since February this year.

On the positive side, the two lines of the Percentage Price Oscillator (PPO) have continued rising. Also, they are nearing the zero line. It is about to move above that level, which would confirm the bullish outlook.

The Relative Strength Index (RSI) has moved above the neutral level of 50. That’s usually a bullish sign in technical analysis.

However, there is a risk that the rally is now losing momentum. For one, the Average Directional Index (ADX) has continued falling. It moved from a high of 42 to 26, its lowest level since January this year. A falling ADX indicator is a sign that the momentum is stalling.

Also, the coin has failed to break the key resistance level at $80,000 despite the rising ETF demand. As such, there is a likelihood that the coin will drop sharply in the near term.

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