Crypto Traders Urged to Exercise Caution Ahead of Fed’s Interest Rate Announcement
Jakarta, Pintu News – As traders in the cryptocurrency market brace for the upcoming announcement of monthly interest rates by the U.S. Federal Reserve (commonly referred to as The Fed), experts are advising caution, particularly regarding the use of high leverage. Michael van de Poppe, the founder of MN Trading Capital, stated that engaging in large leveraged positions during such pivotal times is “a guaranteed recipe to lose money.”
Market Volatility Ahead of Major Economic Decisions
The cryptocurrency market is known for its heightened volatility, especially as it awaits significant macroeconomic decisions. Following the Federal Reserve’s announcement that interest rates would remain unchanged, between 4.25% and 4.5%, Bitcoin’s price showed only minor fluctuations. This stability indicates that traders had largely anticipated the decision in advance.
Unexpected Market Reactions to Powell’s Comments
However, the market reacted sharply when Jerome Powell, the Chair of The Fed, remarked that the likelihood of a recession was “not high.” This statement led to a noticeable increase in crypto prices, despite some independent economists suggesting that recession probabilities are on the rise. The positive response caught many traders off guard, particularly those who had placed bets on declining prices. Data from CoinGlass revealed that over a span of 12 hours, approximately $188.77 million (around Rp3.078 trillion) was liquidated from the crypto market, with $127.80 million (approximately Rp2.084 trillion) stemming from losing short positions.
Price Movements Post-Fed Announcement
Following Powell’s statements, Bitcoin (BTC) temporarily surged by 3.84% over six hours, reaching $87,427 (around Rp1.425 billion), before correcting back down to $85,760 (approximately Rp1.397 billion). In the same period, Ethereum saw a 2.27% increase, while Ripple recorded a commendable rise of 2.40%, building on a previous gain of 7.50% ahead of the interest rate announcement.
In a tweet, van de Poppe emphasized that the impact of Powell’s comments, rather than the formal announcement, was driving market trends. He stated, “That’s what likely defines Bitcoin price action for the coming period.”
Caution Advised for New Positions amid Price Surge
Trading accounts like BitcoinHyper echoed these sentiments, warning that the recent price spike due to the FOMC meeting brought Bitcoin to significant liquidation levels. Their advice to traders was clear: avoid hastily entering new long positions, even with BTC having potential for further gains. Meanwhile, Matt Mena, a research strategy analyst at 21Shares, expressed that although a softer tone from The Fed may provide short-term momentum, it does not guarantee a sustained upward trend. He predicted that Bitcoin would likely remain in a consolidation phase until a stronger catalyst arises.
Long-Term Outlook and Future Interest Rate Projections
In his long-term forecast, Powell informed that the median prediction from FOMC members suggests interest rates would drop to 3.9% by the end of 2025, and further to 3.4% by the close of 2026. This outlook allows crypto investors to maintain hope for monetary easing, potentially boosting demand for digital assets.
Despite this optimistic long-term view, analysts agree on the need for vigilance. Short-term market movements driven by macroeconomic expectations do not always reflect the genuine market direction. As interest in cryptocurrencies continues to rise, effective risk management strategies are pivotal to navigating the landscape of volatility.
Conclusion
The uncertainty surrounding macroeconomic factors, including interest rate decisions by The Fed, play a crucial role in influencing cryptocurrency market movements. While some dovish signals from The Fed have provided temporary support for assets like Bitcoin and Ethereum, traders are reminded to limit excessive exposure to leverage, particularly during volatile periods such as those surrounding FOMC meetings. A cautious, analysis-driven approach remains vital for responding to the current dynamics of the crypto market.
For those looking to expand their knowledge in the crypto space, Pintu Academy offers educational resources for beginners to advanced users. Stay informed on the latest developments in crypto and blockchain technology by following us on Google News. Enjoy a secure and seamless crypto trading experience by downloading Pintu Crypto from the Google Play Store or the App Store. Check out Pintu Pro for advanced trading tools and features and log in to your Pintu account to start trading today.
Disclaimer: This content is intended to inform readers. Pintu aggregates information from various relevant sources and is not influenced by external parties. Past performance of assets does not determine future performance. Crypto trading carries high risks and volatility. Always conduct independent research and use discretionary funds before investing in Bitcoin or other crypto assets.
References: Cointelegraph. Leveraged crypto positions risk losing big before FOMC, says trader. Accessed March 21, 2025.
Share this article:
