Bitcoin, VOC
Bitcoin has entered the first week of May at a very important point and is currently battling to hold its yearly open as support.
The upcoming U.S. Federal Reserve interest rate decision on 7 May has been a major topic of discussion.
Bitcoin’s dominance will likely continue upwards to around 71% before reversing strongly.
Traders have flipped from predicting lower prices ($10K–$69K) in early April to now calling for highs between $100K and $159K.
Recession expectations among U.S. consumers surged to 72% in April, which is the highest level in two years.
Interest rate uncertainty is at an all-time high, and recession fears have taken over the market.
Here are some of the major factors influencing Bitcoin this week, and what you should know.
The upcoming U.S. Federal Reserve interest rate decision on 7 May has been a major topic of discussion.
Inflation concerns, as mentioned, are at an all-time high, and the FED has shown no signs of easing its hawkish stance.
This week’s Federal Open Market Committee (FOMC) meeting could provide more clarity on future monetary policy, even if no immediate rate change occurs.
On the other hand, President Donald Trump has continued to publicly pressure Fed Chair Jerome Powell to lower interest rates, which has done little to ease the tension.
With all of this happening, the CME Group’s FedWatch Tool shows just a 5.2% probability of a rate cut this week.
This means that the market is bracing for Powell to stick to the current interest rates and defy the pressure from Trump.
Crypto traders are currently preparing for the worst, as Bitcoin faces a volatile future this week.
Bitcoin ended last week with a dip to around $93,350 on Bitstamp before rebounding to test the yearly open at approximately $93,500.
This level has become a major psychological support on the technical side.
Popular traders are looking towards Bitcoin continuing further upwards, alongside targets near $97,000 to $98,000.
Interestingly, a gap on the CME Bitcoin futures chart in that region has historically attracted price action in the short term.
Still, other analysts are warning investors to be cautious.
Analyst Rekt Capital recently pointed out that Bitcoin recently rejected a lower-high resistance level.
As such, a failure to hold $93.5K could invalidate the current bullish setup.
Bitcoin’s dominance over the total crypto market cap surged to 65% over the weekend.
For context, this is the highest it’s been since 2021.
While this might sound bullish, analysts believe it could be the end of BTC’s dominance rally.
Rekt Capital again described this dominance surge as the “final countdown.” The analyst also predicts that Bitcoin’s dominance will likely continue upwards to around 71% before reversing strongly.
The 71% dominance level has historically marked the end of Bitcoin’s outperformance and the start of a so-called “altseason.”
On the other hand, the ETH/BTC charts are showing signs of bottoming out.
This means that Ethereum and the altcoins could be on the way to outperforming Bitcoin.
Still, it could be true that the growing institutional demand from the ETF market could be the fuel for this dominance rally.
With investors continuing to pump billions into the ETF market, Bitcoin’s dominance might not fall as sharply as Rekt Capital believes.
So far, sentiment around Bitcoin is starting to improve, especially after the February/March crash.
According to recent updates from Santiment, traders have flipped from predicting lower prices ($10K–$69K) in early April to now calling for highs between $100K and $159K.
This shift in sentiment has pushed the Crypto Fear & Greed Index into “neutral” territory.
Bullish Bitcoin sentiment is rising | Source: Santiment
While this reading from the Fear and Greed Index isn’t particularly bullish, it does show that fear is subsiding.
This could lead to a new wave of “FOMO” (fear of missing out) among retail investors.
Too much optimism can be a bad thing, as price action tends to occur in the opposite direction most times.
It is no secret at this point that the U.S. economy is showing signs of strain.
This has added to the uncertainty around Bitcoin’s short-term future and according to The Kobeissi Letter, recession expectations among U.S. consumers surged to 72% in April.
This stands as the highest level in two years.
Recent jobless claims and soft Q1 GDP data have only fueled fears of an economic slowdown.
Predictions from PolyMarket also confirm the bearish sentiment, with 57% of bettors going for “yes” and 37% going for “no.”
As consumers expect the economy to suffer, they tend to reduce their spending on risk markets.
At the end of the day, the market could suffer alongside the upcoming updates from the FED.
Overall, Coinbase’s upcoming earnings report and jobless data due on May 8 could introduce fresh volatility and flip the script in favor of the bulls, somewhat.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.