Fed Watch: Bitcoin Gives Up Weekend Gains, Analysts Say Not To Worry

Bitcoin and ether lost close to 3% and 4%, respectively, ahead of the Fed’s rate decision

article-image

tungtaechit/Shutterstock.com modified by Blockworks

share

Major crypto tokens retreated Monday and erased their weekend gains as traders gear up for a potentially volatile week ahead of the Federal Reserve’s interest rate decision. 

Bitcoin was trading about 2.5% lower Monday afternoon in New York, hovering around $23,000 after briefly approaching $24,000 on Sunday. Ether was similarly down, trading almost 4% lower and remaining around the $1,500 level. 

The whipsaw pattern has some traders crying “bull trap,” since both bitcoin and ether were unable to rally past their breakout levels, but analysts say there is likely steam left in the rally after this week’s uncertainty. 

“I’d really view this as natural volatility rather than any major market signal,” Darius Tabatabai, CEO of decentralized exchange Vertex Protocol, said. “With the Federal Open Markets Committee meeting this week, I’d expect the market to take a breather and positioning to slow down slightly as traders clean up their books ahead of the meeting.”

Markets are nearly certain the Fed will opt for a slower-paced hike this week and decide on a 25 basis point increase, according to data from CME. With cooling inflation, slowing growth and a general sentiment among international central banks that a pause in rate hikes is warranted, some investors are wondering if the Fed’s hawkishness is fading.

“Reaching peak hawkishness is one of our three keys to a bottom, and the most important one, so if the Fed has reached peak hawkishness that’s a powerful positive to consider,” Tom Essaye, founder of Sevens Report Research, wrote in a note Monday. 

Of course, with inflation still running far above the Fed’s 2% target, its work is not yet complete, Essaye added. 

Retracement or not, the next few days will be telling in terms of future price action, Marcus Sotiriou, market analyst at GlobalBlock, said in a note, Monday. If crypto tokens can manage to break through these key resistance levels, traders can rest assured the rally will be sustained, he added. 

Even amid Monday’s falter, crypto is poised to lock in a strong month. Bitcoin and ether are up about 40% and 32%, respectively, since the start of the year, a historic feat for January, Josh Olszewicz, head of research at Valkyrie Investments, said. A minor selloff is not yet telling of a lasting trend, he added. 

“Low timeframe technical analysis, including a rising wedge or channel with declining momentum on relative strength index, does support a near term pullback in price,” Olszewicz said. “This combination of technicals is commonly seen when rallies become overextended and can trap entrants who were late to the party.”


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates (3).png

Research

Pear Protocol has proven its market fit through its pair-trading infrastructure, sustaining consistent trading activity despite recent headwinds. Its strategic pivot toward Hyperliquid integration represents a major growth catalyst amid industry consolidation. While short-term token unlocks present challenges, current valuations and liquidity conditions may offer compelling opportunities for investors.

article-image

The House embraces crypto — but keeps the fences up

article-image

The network got slower in June — and it wasn’t for tech-related reasons

article-image

After a jittery few months, recent economic data is hinting at a resilient economy that is beginning to re-accelerate

article-image

The stablecoin bill now heads to the president’s desk

article-image

The House on Thursday passed the CLARITY Act, a landmark cryptocurrency market structure bill

article-image

Interchain Labs will focus on sovereign L1s and institutional demand, abandoning plans for smart contracts on the Cosmos Hub