Bitcoin analysts warn that decisions by the Federal Reserve and the Bank of Japan could put pressure

Bitcoin consolidates around $77,000 as investors wait for Fed decision

Bitcoin prices remain around $77,000 as investors reduce their exposure ahead of the Fed's policy decision on September 16. Analysts are closely watching support at $76,000 and resistance at $83,000.

Market pricing and capital flows

Bitcoin is still fluctuating within range, and the market has priced the probability of the Federal Reserve raising interest rates by 25 basis points (approximately 86%-87%). Analysts pointed out that $76,000 and $83,000 are key levels to confirm Bitcoin's next move. Last week, the U.S. spot Bitcoin ETF recorded a net outflow of approximately $463 million.

Nansen senior research analyst Nicolai Søndergaard told crypto.news that although the expected 25 basis point rate hike may have been absorbed by the market, Bitcoin traders took a cautious stance ahead of Wednesday's Fed decision. Trading was volatile over the weekend, with funds concentrated in Bitcoin and other liquid cryptocurrencies rather than small tokens or leveraged positions. Søndergaard interprets this situation as investors waiting for guidance from the central bank rather than withdrawing from the crypto market completely.

"Investors are not rushing to leave, but they are not chasing risk; they are stuck in mainstream currencies, waiting for the Fed to show their cards." he said.

Key Points and Technical Analysis

The price's hovering around $77,000 puts Bitcoin close to the lower edge of the range that analysts expect to continue until the central bank meeting provides clear direction. Søndergaard said prices would have to break above about $83,000 or fall below $76,000 before he believed this was an effective directional breakthrough. Without confirmation, he expects traders to continue to take short positions around this week's policy events.

"At present, the market is still in a range of volatility. I would like to see a clear breakthrough in prices above about $83,000 or below $76,000, backed by strong spot volume, before viewing it as a real directional move."

Analysts at Bitfinex also identified a similar trading range. Based on previous market analysis, they believe the Fed's decision will generate enough volatility to allow Bitcoin to test liquidity around $82,000 and $76,000, rather than move cleanly in a single direction.

Market caution has also appeared in investment fund products listed in the United States. Bitget Wallet research analyst Lacie Zhang said U.S. spot bitcoin exchange-traded funds recorded a net outflow of approximately $463 million last week, although buyers continued to defend bitcoin around $76,000. Zhang said that the outflow indicates that allocation demand has weakened but not disappeared. Another ETF flow report showed weekly withdrawals of $462.7 million, while spot Ethereum funds attracted $196.9 million over the same period.

The risk of Fed guidance is greater than the rate hike itself

Zhang and ViaBTC chief analyst Jeff Ko pointed out that interest rate futures have set the probability of a 25 basis point rate hike by the Fed at about 86%-87%. Two analysts said the decision itself has been absorbed broadly by the market, with policy statements, economic forecasts and Federal Reserve Chairman Kevin Warsh's press conference becoming the main sources of risk.

Zhang said that hawkish surprises could push up two-year Treasury yields and real yields, thereby increasing pressure on Bitcoin and other non-interest-earning assets. If the decision is made to leave interest rates unchanged, or guidance suggests that a single rate increase is sufficient, the opposite market reaction may occur.

Ko linked changes in interest rate expectations to last week's U.S. Consumer Price Index (CPI) report. He said the overall CPI rose 0.4% from the previous month and 3.4% from the same period last year, with gasoline accounting for more than one-third of the monthly increase. Core CPI rose 0.3% month-on-month, slightly higher than the consensus forecast of one-tenth of a percentage point, but its annual rate fell to 2.4%, the lowest level since March 2021. Ko said that ahead of the inflation report, futures had set the probability of a quarterly rate hike at about 65%-70%.

"Overall, I think raising rates will help build the credibility of a new chairman, whose response function is still being tested. The more interesting question is whether this is a one-time insurance measure or the beginning of another cycle, and the 'dot map' will answer this question more clearly than the decision itself."

Ko added that post-announcement long-term bond yields may provide a more useful signal than interest rate expectations. As of September 10, the 10-year yield was close to 4.95%, while the 30-year yield was approximately 5.37%.

For Bitcoin, Ko stated that investors should comprehensively evaluate the actual rate of return, the US dollar exchange rate and spot ETF flow. His optimistic scenario requires yields to stabilize or fall after interest rate hikes and continued accumulation of ETF shares, indicating that institutional buying is absorbing tightening financial conditions.

The CLARITY bill vote brings a second U.S. risk

Before the Federal Reserve announced its decision, the U.S. Senate plans to hold a procedural vote on the CLARITY bill on Tuesday afternoon. The measure requires 60 votes to move forward, with Republicans holding 53 seats, so it requires the support of at least seven Democrats.

Ko said the forecast market has reduced the probability of the bill passing. In his assessment, if the bill fails to advance, U.S. crypto market structure legislation may remain pending until Congress in 2027. Ko added that the failed procedural vote combined with hawkish Fed forecasts could exacerbate the impact on the crypto market, as the two events could affect regulatory expectations and financial conditions in about a day.

Republican senators submitted Democrats a 635-page proposal containing 126 required changes. The draft includes amending moral restrictions for federal officials, lawmakers, judges and their spouses, as well as proposing the Treasury's power to respond when payments of stablecoins lead to widespread withdrawals of deposits from community banks.

Opposition also comes from state officials. A team of 17 attorneys general, including officials from California, Illinois, Arizona, Kansas, Ohio and Wisconsin, challenged the bill ahead of a procedural vote.

Bank of Japan interest rate hikes may squeeze crypto carry trade

Outside the United States, Zhang pointed to the Bank of Japan as an under-priced source of market risk. Investors generally expect the Bank of Japan to raise its policy rate to 1.25%, but she said the increase could reduce yen financing liquidity even if traders expected it.

Higher Japanese interest rates would increase borrowing costs for investors who raise funds in yen and invest capital elsewhere for stronger returns. Zhang said that as these positions are closed, pressure may be transmitted to the cryptocurrency market faster than if the Bank of England had kept interest rates unchanged.

"The Federal Reserve remains the bitcoin-dominated central bank signal because it sets the background of dollar liquidity and real yields for non-interest-bearing assets. But the market may have underestimated the role of Japanese banks."

Zhang said that to produce less disruptive results, the central bank needs to characterize any tightening as dependent on incoming economic data rather than the beginning of repeated interest rate increases. The Bank of England and the Bank of Japan will announce their policy decisions after the Fed meeting.