Bitcoin Traders Eye Fed Dot Plot Over Rate Decision Amid Market Uncertainty

TL;DR

• The Federal Reserve is expected to hold interest rates steady at its June 2025 meeting.
  
• Traders are shifting focus from the rate decision to the “dot plot” — a graphic of future rate projections.
  
• A hawkish dot plot suggesting fewer cuts could pressure Bitcoin’s price, which has stalled above $100K.
  
• Broader concerns include U.S. debt servicing costs and Middle East tensions which may limit Fed flexibility.
  
• Bitcoin remains an appealing hedge amid macro instability, particularly if real yields remain low.
  

Fed’s Rate Pause Anticipated — But the Market Watches the Dot Plot

As the Federal Reserve’s Open Market Committee (FOMC) prepares for its next monetary policy update, analysts expect no change to interest rates, keeping the federal funds target range at 4.25% to 4.50%. The decision is set to be announced on Wednesday at 18:00 UTC, followed by Chair Jerome Powell’s press conference at 18:30 UTC.

According to the CME FedWatch Tool, traders overwhelmingly expect the Fed to remain on hold, especially in light of continued inflation pressures and geopolitical uncertainty.

However, crypto markets aren’t focused on the rate move. Instead, all eyes are on the Fed’s dot plot — a quarterly chart that shows each Fed official’s projected path for future interest rates.

Federal Reserve and Bitcoin Market Impact Metrics

Hawkish Dot Plot Could Squeeze Bitcoin Momentum

According to XBTO, a crypto trading and market-making firm, the rate hold is already priced in. What truly matters now is the tone of the dot plot.

“Fewer than two projected cuts would harden the higher-for-longer narrative; a dovish surprise would lighten the dollar and could unfreeze crypto’s bid,” XBTO noted in a memo.

This means that if the Fed signals fewer rate cuts in 2025 than previously expected, the market may interpret this as hawkish. In response, Bitcoin could face renewed downside pressure, especially with the BTC rally stalling around the $100,000 level.

Rate Cut Expectations Keep Dropping

Fed officials entered 2025 projecting up to 100 basis points in rate cuts, but that forecast has steadily declined.

Matteo Greco, Senior Analyst at Fineqia, shared with CoinDesk that current expectations are now closer to 50 basis points, with potential for further reductions to just 25 bps if geopolitical risks persist.

“This revision is driven by a resilient labor market and inflation that, while moderated, remains above the 2% target,” Greco said.

Additionally, a prolonged Middle East conflict, coupled with supply chain reconfigurations tied to U.S.-China trade tensions, could contribute to inflation stickiness and reduce the Fed’s ability to ease.

Fiscal Fallout: Why Bitcoin Still Looks Attractive

A Fed that keeps rates elevated doesn’t only impact risk assets like equities or crypto. It also deepens the U.S. fiscal imbalance by increasing debt servicing costs on the nation’s growing liabilities.

Higher interest payments will pressure the Treasury, likely triggering concerns about long-term debt sustainability. In this context, alternative stores of value — such as gold and Bitcoin — become more appealing to institutional investors.

“If the real yield stays negative or neutral over time, investors will look for hard assets — that’s bullish for Bitcoin,” one macro strategist told Bloomberg.

Bitcoin’s Macro Setup: Uncertain but Supported

Despite near-term headwinds, Bitcoin remains well-positioned within its current macro setup:

• Inflation is not yet under control, and any spike could renew demand for digital assets.
  
• The dollar’s recent strength may reverse if global liquidity loosens.
  
• Institutional allocations into BTC ETFs remain steady, even as prices consolidate.
  

However, Bitcoin’s path higher likely depends on clarity from the Fed and a less hawkish economic outlook.

Trader Sentiment: Neutral with Eyes on the Dot Plot

Most traders are holding positions or employing volatility hedging strategies ahead of the Fed announcement. The crypto derivatives market shows signs of range-bound options activity, indicating uncertainty rather than a directional bias.

“Until then, patience rules,” added XBTO, underscoring the market’s wait-and-see approach.

If the dot plot reveals dovish surprises — such as three or more projected rate cuts in 2025 — we could see a renewed risk-on rally, with Bitcoin testing fresh highs above the $100K barrier.

Looking Ahead: What to Watch After the Fed Meeting

Crypto investors should monitor these upcoming developments:

1. Jerome Powell’s Post-Meeting Comments – Any subtle guidance on inflation, labor, or global risks.
   
2. Updated Economic Projections – Especially related to GDP and PCE inflation.
   
3. BTC ETF Flows – Institutional demand patterns post-Fed can offer early directional signals.
   
4. Bond Market Reaction – A sharp move in yields will dictate near-term crypto volatility.
   

The combination of macro uncertainty, fiscal stress, and policy tightrope walking will continue to shape Bitcoin’s trading environment — with the Fed’s dot plot as the next key catalyst.