Crypto Market Update: Bitcoin, Altcoins Advance Ahead of Key Fed Rate Policy

Bitcoin (BTC) and the broader crypto market climbed, tracking Wall Street’s tech-driven rebound from a sharp selloff that rattled global markets earlier this week. Traders now focus on the Federal Reserve’s rate decision.

As of Jan. 29, Bitcoin had reclaimed the $100,000 threshold as support after rising 4.60% from its local low established two days ago. Ethereum, the second-largest cryptocurrency by market cap, rebounded in tandem with an almost 4% rise.

Smaller altcoins, including XRP (XRP), Dogecoin (DOGE), and Cardano (ADA), also performed well during the same period.

Cryptocurrencies rebounded after a rocky start to the week, driven by concerns that a low-cost AI model from Chinese startup DeepSeek could challenge the lofty valuations underpinning the tech-led bull market.

However, the fears subsided amid a slew of optimistic updates from the industry. For instance:

• MicroStrategy bought another $1.1 billion in Bitcoin.
• Metaplanet announced it would raise over $700 million to buy Bitcoin.
• Bitwise filed for Dogecoin ETF.
• Ripple (associated with XRP) gained money transmitter licenses in New York and Texas
• Cboe BZX refiled for a Spot Solana ETF with the US Securities and Exchange Commission (SEC).

…and others.

Fed Rate Policy And Its Impact on Crypto Market

The crypto market’s rebound move is calming ahead of a key update on interest rates from the Federal Reserve.

The US central bank will likely hold interest rates steady on Jan. 29 as strong demand and stubborn inflation persist. Meanwhile, bond traders are ramping up bullish bets on US Treasuries. There is over a 30% chance that US policymakers will lower their benchmark rate in March, compared to about 25% a week ago.

With inflation remaining stubborn, attention turns to Powell’s afternoon press conference for clues on the outlook ahead of the next meeting in a few months.

Hedging for a potential March rate cut seems logical after December’s cooler inflation data and Fed Governor Christopher Waller’s remark that easing by mid-year is possible. However, a key uncertainty remains—Donald Trump’s tariff plans and their impact on the US economy.

If the Federal Reserve signals a potential rate cut in March, the crypto market could rally, as lower borrowing costs typically boost risk appetite.

As traders anticipate a looser monetary environment, Bitcoin and altcoins may see increased inflows. Conversely, if Powell strikes a hawkish tone, emphasizing persistent inflation and delaying cuts, crypto could face short-term downside pressure.

A neutral stance, with no clear guidance on cuts, may lead to choppy trading in Bitcoin and other top cryptocurrency markets.

Bitcoin, Ethereum Technical Outlook Ahead of Fed Meeting

Bitcoin is holding above the key 50-day exponential moving average (EMA), currently near $98,282, as traders await the Federal Reserve’s rate decision. Historically, The support level has been a key trend indicator, with BTC bouncing off it multiple times in recent months.

If buyers defend this support, BTC/USD could retest the upper resistance zone near $112,000, where sellers have previously capped gains. However, failure to hold the 50-day EMA may expose BTC to deeper losses, with the next major support around $89,000.

The RSI indicator remains neutral at 53.26, suggesting BTC still has room for movement in either direction. Meanwhile, the 200-day EMA, positioned around $82,147, remains a long-term safety net.

Ethereum Analysis

Ethereum is trading near the lower boundary of a falling wedge pattern, a historically bullish reversal setup. Currently priced at $3,125, ETH is testing a crucial support zone as the wedge nears its breakout point.

A successful breakout above the wedge’s resistance line could confirm a bullish reversal, potentially sending ETH toward the $3,840 target derived by measuring the wedge’s widest range and projecting it from the breakout point.

This aligns with Ethereum’s previous resistance levels, adding credibility to the upside projection.

On the downside, failure to hold the support trendline and the 200-day EMA ($3,135) could invalidate the bullish setup. A breakdown below this level might see ETH testing $3,000 and potentially sliding toward deeper support.

The RSI at 41.80 suggests ETH is approaching oversold conditions, increasing the likelihood of a rebound. Traders will closely watch for a breakout confirmation and market-wide cues from the Federal Reserve’s rate decision.