5 min read Bitcoin’s recovery from the 2026 low to 67k, a two-week high, has stalled and reversed lower amid jitters ahead of the FOMC rate decision later today.
The largest cryptocurrency trades 3% lower over the past 24 hours but still holds gains of 5.5% over the past week. Major altcoins are also under pressure in the near term, with the total crypto market capitalisation down 1.5% over the past 24 hours.
Optimism surrounding the U.S.-Iran peace deal, due to be signed on Friday, sparked a risk-on mood across global markets. Oil is down 12% this week, the Dow Jones has risen to a record high, and Europe’s Stoxx 600 also touched fresh record levels. Bitcoin briefly climbed to 67k.
BTC jitters ahead of the FOMC rate decision
However, sentiment is turning more cautious as attention shifts to the Federal Reserve interest rate decision at 18:00 GMT today. In the first meeting under Federal Reserve Chair Kevin Warsh, the central bank is expected to leave rates unchanged at 3.50%-3.75%, but it could remove the easing bias from its statement in acknowledgement of elevated inflation.
Given that a hold is fully priced in, investors will focus on the economic projections, the dot plot and Kevin Warsh’s press conference for further clues on the path for interest rates.
The meeting comes against an improving backdrop as oil prices have fallen to $80 per barrel, a three-month low, while Treasury yields have eased, helping to bring inflation expectations lower. However, inflation remains at 4.2%, more than double the Fed’s target, while the U.S. economy continues to show resilience.
US retail sales highlight a resilient economy
Not only have the past three NFP reports shown solid job creation, but data released today showed U.S. retail sales rose 0.9% in May, ahead of the 0.5% expected. While some of the increase reflected higher petrol prices, core retail sales, which exclude gasoline, automobiles, building materials, and food services, rose an impressive 0.7% after a 0.5% increase in April. The data points to continued strength in consumer spending, a key driver of U.S. economic growth.
Given this backdrop, the market is pricing in a 60% probability that the Fed could hike rates before the end of the year.
Should Warsh push back against market expectations for further hikes, this could be interpreted as a dovish signal. However, if he acknowledges falling oil prices but remains focused on elevated inflation and a resilient labour market, investors may see this as support for a higher-for-longer interest rate outlook.
A hawkish stance from the Federal Reserve could lift the U.S. dollar and weigh on risk assets such as Bitcoin, potentially stalling the recent recovery from the 2026 low.
BTC ETF outflows ease: Is the selloff slowing?
Elsewhere, ETF data suggests institutional selling pressure may be easing. Spot Bitcoin ETFs recorded net inflows of $10.1 million on Tuesday after several weeks of heavy outflows. BTC ETF demand was a key driver of BTC to record highs in October and institutional demand will need to recover more meaningfully if Bitcoin is to sustain a broader recovery.
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