Assessing Bitcoin’s short-term outlook as Fed maintains interest rates

• BTC topped $105K post-Fed’s rate pause decision. 
• Key levels to watch in the short term were $108K, $110K, and $97.5K. 

After the recent Fed rate decision, Bitcoin [BTC] reacted moderately and reclaimed $105K. On the 29th of January, the Fed held interest steady at 4.25%- 4.5%, citing elevated inflation as the reason for the rate pause. 

Part of the agency statement read, 

“The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated.” 

BTC reacts to inflation fears

Despite the ‘hawkish stance,’ Chair Jerome Powell was not overly bearish during the press conference. In fact, he was open to dropping rates even if the 2% inflation goal wasn’t met. 

That said, the market expected the rate pause. Powell’s presser’s mixed signals kept BTC within the short-term $100K-$105K range. 

Interestingly, President Donald Trump didn’t approve the Fed’s rate pause decision and slammed Powell. He added that he would handle U.S. inflation by unleashing more energy production to bring down the prices of goods. 

Source: X

That said, the market focus will shift to key inflation data and the Fed’s favorite—the PCE (Personal Consumption Expenditures) price index, set to be released on January 31st. 

Will U.S. inflation report favor BTC?

21Shares’ crypto strategist, Matt Mena explained to AMBCrypto how Friday’s PCE price index report could impact BTC. He said, 

“While today’s Fed decision didn’t shake the market, investors are waiting for confirmation that rate cuts are on the horizon. Until then, BTC is likely to consolidate within its current range, with $105K as the key breakout level and $108K as the next major upside target if Friday’s data tilts in favor of risk assets.” 

Mena’s projection echoed Coinglass’s 2-week liquidation heatmap chart.

In most cases, high liquidity pockets act as price magnets. In a liquidity sweep scenario, BTC could target the immediate liquidity levels (bright yellow) at $108K and $110K. 

However, a bearish sentiment from the inflation data could drag BTC to the lower side pocket of liquidity at $97.5K. 

Source: Coinglass