Bitcoin, Ethereum and Solana could swing sharply as investors await Jerome Powell’s rate announcement and guidance
Cryptocurrencies have traded up and down over the past week following a rough correction across the board. While key long-term support levels stopped the steep decline and bargain hunters stepped in, the market failed to hold its highs despite a strong session yesterday.
This afternoon’s Federal Reserve event will be critical for all asset classes, including crypto. The central bank’s decision on interest rates and Chair Jerome Powell’s guidance about 2026 could trigger dramatic moves in digital currencies within hours.
FOMC events often trigger sharp swings between risk-on and risk-off sentiment. As risk assets, cryptocurrencies often correlate with equities. During the 2023 hiking cycle, risk assets dropped lower, triggering massive selloffs in the crypto market. Rate-cutting cycles typically boost non-yielding assets like gold and Bitcoin.
On a straightforward basis, a cut should support higher prices, though the reaction will depend heavily on whether the Fed’s guidance for 2026 is dovish. If today’s highly probable rate cut fuels risk appetite, Bitcoin and its peers should rise.
The Bank of Canada held its rate at 2.25 percent unchanged during its press conference earlier today, adding to the anticipation around what the Fed will do differently.
How different scenarios play out
If sentiment becomes enthusiastic following the Fed announcement, expect memecoins and altcoins to outperform. If the mood is positive but measured, look for market leaders like Bitcoin, Ethereum and Solana to lead the charge.
1. Bitcoin’s position: The original cryptocurrency rallied a strong 14 percent since reaching its $80,563 lows on Nov. 21, bringing back intermediate momentum into balance from heavily bearish. Still, the chart doesn’t point to immediate bullish domination as the RSI indicator moves sideways. Sellers appeared at the highs of the bear channel, creating caution among traders.
The rebound was primarily technical, with Bitcoin retesting its long-term support levels. A daily close above $94,000 points to a continued break higher. If the rest of the market follows suit, a new uptrend might emerge. A yearly close above $100,000 confirms the return of a long-term bullish environment.
Hanging close within the $88,000 to $92,000 range maintains the current hesitant picture. A close below $88,000 may relaunch the bearish trend, which could prove dangerous for the market outlook.
2. Ethereum’s stronger breakout: The second-largest cryptocurrency shows even more solid technical progress than Bitcoin. Traders may expect Ethereum outperformance if today’s FOMC meeting is bullish. In a bearish case, Ethereum and other altcoins typically underperform more sharply.
In a bullish session, a close above $3,400 continues the more bullish momentum found recently. Traders should track the upward trendline in this case. In a balanced FOMC session, prices should maintain between $3,000 to $3,300, indicating that traders will be looking to learn more with rangebound action.
In a bearish session, Ethereum should close below $3,000 and relaunch the bearish prospects. The cryptocurrency recently rebounded from support between $2,500 to $2,700, its key June support level.
3. Solana’s rangebound struggle: The third-largest cryptocurrency has rebounded but still struggles to find upside momentum, holding its mid-October downward channel. Solana maintains rangebound price action between $125 to $145.
A bullish case sees Solana closing above $145, which would imply a return of confidence in the crypto and should increase odds of a channel breakout with $155 as the level to watch. The neutral case keeps the ongoing range intact, which isn’t terrible considering how bearish the previous momentum was. It also holds the line for a future rebound.
A bearish case pushes Solana to the lows of its range, which may trigger a further selloff with support around $110 to $115 becoming critical.
What traders are watching
Rate-cutting cycles typically provide tailwinds for assets that don’t produce yield, including cryptocurrencies. The Fed’s expected quarter-point cut today would mark the third reduction of 2025, but Powell’s commentary about future moves matters more than the immediate decision.
If Powell signals aggressive pausing through 2026 as expected, risk appetite could cool quickly. That would likely pressure cryptocurrencies in the near term despite today’s rate cut. Conversely, if Powell leaves the door open for additional cuts depending on economic conditions, crypto markets could rally strongly.
Market participants have about three hours before the announcement to position themselves. The decision comes at 2 p.m. Eastern Time, followed by Powell’s press conference where his tone and word choices will be dissected for clues about the Fed’s 2026 plans.
The correlation between traditional finance and crypto markets has strengthened significantly over recent years, making Federal Reserve decisions increasingly important for digital asset investors. Today’s event represents one of the final major catalysts of 2025 that could set the tone for cryptocurrency performance heading into the new year.
Source: OANDA MarketPulse