As the Federal Reserve is set to announce its latest policy decision, Bitcoin's recent upward momentum has encountered familiar resistance.
As of March 18, Bitcoin's price stood at $72,141, down 1.27% on the day. After opening at $72,916 on the current 4-hour candlestick and hitting a low of $71,978, the downward trend has accelerated. In just a few hours, Bitcoin erased several days of gains, with the Relative Strength Index (RSI) significantly retreating to 43.86, far below the signal line of 64.15. The last time such a rapid momentum decline occurred was in February when Bitcoin fell below $70,000.
The key technical support level to watch is the 50-period Simple Moving Average (SMA) at $71,767. The price is quickly approaching this level, and whether this candlestick can hold above it will largely determine if this decline is a healthy correction or the beginning of a broader downturn.
Impact of the Fed Meeting on Bitcoin
The market widely expects the Federal Reserve to keep interest rates unchanged at its March meeting, with almost everyone confident in this outcome. On the surface, maintaining rates should be a neutral event. However, in practice, Federal Open Market Committee (FOMC) meetings have historically put short-term pressure on Bitcoin, regardless of the final decision. This is because traders tend to reduce risk exposure ahead of the statement release and reassess their positions afterward.
This dynamic is particularly pronounced in the current market landscape. Bitcoin had already risen for eight consecutive days earlier this week, with prices soaring from around $69,200 to a high of $75,800 on March 17. Such a strong rally has accumulated a lot of bullish sentiment, which often gets reversed when the market shifts its focus from narrative to macro realities.
The Fed is not expected to cut rates in the short term. The futures market has only priced in a single 25 basis point cut within the year. Given that oil prices remain high and inflation is still above target levels, the rationale for tightening monetary policy remains limited. This backdrop eliminates one of the key factors supporting Bitcoin's continued rise—the expectation of a future easing monetary environment.
Outlook
The $71,767 SMA level is the first significant technical test. If Bitcoin can find solid support at this level and rebound above $73,000, it would indicate that selling pressure is under control and the overall upward trend can be maintained. Conversely, a drop below this level, especially on increased volume, could open the door to the $70,000 mark, which has played both support and resistance roles multiple times over the past few months.
The Fed's statement will be released later today. Until then, given that the market is waiting for clear signals on policy tone and future guidance, Bitcoin's short-term movement may lean towards sideways consolidation or slight declines. However, while less likely, a dovish surprise could be the only event capable of quickly reversing the current downward momentum. Aside from that, Bitcoin may continue to face pressure until risk events clarify and the market can reassess from a clearer standpoint.