The crypto market is on edge as the Federal Reserve prepares to announce its first interest rate decision of 2024. According to the CME, there is a 96.9% chance that interest rates will remain unchanged, but uncertainty looms with a 47% chance of a 25 bps rate cut in March. This decision, along with the upcoming release of the January unemployment rate, could greatly impact market sentiment.

The Federal Reserve’s interest rate decision has a significant influence on traditional markets, and it has also been observed to affect the cryptocurrency market. If rates remain unchanged, it could maintain stability in investments like Bitcoin and Ethereum. However, a rate cut could signal economic caution and potentially decrease the appeal of risk assets like cryptocurrencies. Alternatively, it could lead investors to seek higher returns in the crypto market if traditional investments falter.

Looking at the Bitcoin chart, there is a clear battle between the bulls and bears. The $42,500 mark is a crucial resistance level to watch, as a decisive close above it could indicate increasing bullish momentum. On the other hand, the $39,528 support level, which also aligns with a psychological round number and a previous area of interest, is likely to be defended strongly by traders.

The upcoming Fed decision could serve as a catalyst for Bitcoin’s next major move. If rates remain unchanged, Bitcoin could continue to test the resistance level, and a break above it could confirm a bullish reversal. However, if rates decrease, Bitcoin’s reaction could be even more unpredictable.

This article was originally published on U.Today