The Federal Reserve left rates unchanged on May 7, but macro factors and liquidity injections could still propel Bitcoin toward $100,000.
BTC Holds Above $96K as Market Eyes Liquidity, Recession Hedge Narrative
Bitcoin (BTC) is trading at $96,161, up nearly 3% after the U.S. Federal Reserve held its benchmark interest rate steady at 4.25%–4.50%, extending its monetary policy pause for the third consecutive meeting. While no rate cut was announced, analysts believe that cryptocurrencies may still rally as broader financial conditions shift in favor of scarce, risk-on assets.
Why the Fed’s Decision Could Still Be Bullish for Bitcoin
Though the Federal Open Market Committee (FOMC) did not alter rates, it acknowledged rising risks of both unemployment and inflation amid uncertain economic conditions and sticky consumer price levels. That backdrop, coupled with U.S. Treasury bond purchases and global currency devaluation, sets the stage for a renewed crypto rally.
Economist Jim Paulsen notes that when the Fed Funds rate remains above the “neutral” level (adjusted for core PCE inflation), the U.S. economy historically drifts toward recession or "growth stagnation." That is now reflected in falling consumer sentiment and increased pressure on Federal Reserve Chair Jerome Powell, who has faced criticism from President Donald Trump for not easing faster.
Treasury Intervention, Liquidity Injection May Support Crypto
On May 5, the Fed conducted a $20.5 billion Treasury bond purchase, a signal of possible renewed balance sheet expansion. While not a formal easing policy, such actions often inject liquidity into markets — a historically bullish condition for Bitcoin and digital assets.
Further, with Treasury yields flattening and expectations for multiple rate cuts diminishing, some investors now favor alternative hedges like Bitcoin, gold, and commodities over cash or bonds.
Dollar Weakness and Gold Surge Favor Bitcoin Momentum
The U.S. Dollar Index (DXY) has fallen below 100 for the first time since July 2023, highlighting declining confidence in U.S. monetary leadership. At the same time, gold has surged over 12% in the past 30 days, trading near its all-time high of $3,500. Both trends point to a rising appetite for scarce, inflation-resistant assets — and Bitcoin fits that narrative.
Bitcoin Price Eyes $100K Breakout
As Bitcoin hovers above $96,000, analysts say the psychological barrier at $100,000 is the next major target. Should macro conditions persist — including weak U.S. dollar performance, limited Treasury confidence, and continued liquidity injections — BTC may be poised for a breakout in the coming weeks, regardless of rate policy.
Meanwhile, the Crypto Fear & Greed Index has jumped to 67, reflecting growing investor optimism, according to Cointelegraph.
