Bitcoin experienced a rebound on Wednesday morning, aligning with a rise in the broader crypto market as the U.S. dollar faced downward pressure ahead of a crucial Federal Reserve interest rate decision later today.
Recent data indicates that Bitcoin (BTC) climbed from a Tuesday low of $87,315, stabilizing around $89,310 at the time of writing. This uptick has also positively impacted other prominent cryptocurrencies, such as Ethereum (ETH), BNB, XRP, and Solana (SOL), which recorded gains between 1% and 3%. Consequently, the overall cryptocurrency market increased by 1.3% in the past 24 hours, reaching a market cap of $3.1 trillion.
Despite these movements, investors appear to be exercising caution, awaiting clearer signals before committing significant capital back into the market. The price of Bitcoin has been in a downtrend since January 15. Contributing to the current market dynamics are recent tariff threats from U.S. President Donald Trump regarding Canada”s trade dealings with China, which have weakened the U.S. dollar, pushing it to its lowest point since early 2022.
This depreciation of the dollar has sparked rallies in precious metals like gold and silver, which hit new highs this week. However, this has resulted in capital rotation away from the cryptocurrency space. According to the latest findings from Santiment on X, social media discussions currently favor gold and silver over cryptocurrencies.
In this environment, the two leading dollar-pegged stablecoins, Tether (USDT) and USD Coin (USDC), have experienced their lowest values since November 20, marking the steepest decline in ten days. The cryptocurrency market has witnessed a liquidity outflow during a period when U.S.-listed spot Bitcoin exchange-traded funds are also experiencing consistent outflows.
The lack of buying demand led to Bitcoin losing the $90,000 support level, indicating that traders are remaining cautious as they await the Fed”s rate decision scheduled for 2:00 PM ET. The market largely anticipates that the Federal Reserve will maintain interest rates in the current range of 3.50% to 3.75% during this policy meeting, as officials evaluate the impact of three previous rate cuts made in late 2025.
According to the CME FedWatch tool, the probability of no change in rates at today”s meeting exceeds 97%. Given that the market has largely priced in this expectation, a steady rate decision could bolster bullish sentiment for risk assets, including Bitcoin. Traders often adopt a risk-on approach when the Fed signals either a rate cut or maintains rates, while any hawkish signals could lead to a market correction as investors reassess their optimistic outlook.
Analyzing the price action, the 4-hour chart for Bitcoin indicates that the asset is moving within an ascending parallel channel pattern, a configuration that suggests a potential continuation of price increases as long as it remains within this formation. Momentum indicators, including the MACD, show an upward trend following a bullish crossover, indicating that the current rally retains sufficient momentum before any anticipated pullback.
Additionally, the Relative Strength Index has demonstrated a bullish divergence, which could serve as another buy signal for traders. Therefore, Bitcoin has a considerable opportunity to reclaim the $90,000 support level soon, likely ahead of the FOMC meeting today. A decisive breakout from this channel, which also coincides with its 50-day Simple Moving Average, could prompt more aggressive buying, positioning BTC for additional upside potential.
