Bitcoin's Decline as Fed Rate Cut Hopes Fade

Bitcoin (BTC) experienced a notable drop below $108,000 as market expectations for Federal Reserve rate cuts diminished. The decline followed the Wall Street opening on May 28, with traders adjusting their positions ahead of the Fed's May meeting minutes. Analysts now anticipate the first rate cut no earlier than September, a shift from earlier predictions of multiple cuts in 2024.

Market Sentiment Shifts on Fed Policy

CME Group's FedWatch Tool reflects dwindling optimism for rate reductions, showing decreased probabilities for cuts before September. This change in outlook has impacted risk assets, including cryptocurrencies. Kalshi, a prediction service, noted a reduction in expected 2025 rate cuts from four to two, signaling growing uncertainty among investors.

——The labor market could force the Fed's hand—— suggests The Kobeissi Letter, pointing to weakening consumer sentiment about job availability as a potential precursor to rising unemployment. Historical patterns indicate such trends often precede policy adjustments, possibly accelerating rate cuts despite current market expectations.

Bitcoin's Price Action and Market Dynamics

BTC/USD broke through key support levels, approaching multi-day lows. Trading analysis highlights 【$108,900】 as a critical threshold, with substantial short liquidations clustered above this mark. TheKingfisher, a prominent trader, observed this creates an "imbalance biased towards short liquidations" that could influence future price movements.

QCP Capital's macro analysis suggests the crypto market lacks catalysts for significant movement. "Volatility continues to drift lower across asset classes," their bulletin noted, describing markets as "inured to negative developments" that previously triggered stronger reactions. This complacency contrasts with Bitcoin's 【$112,000】 all-time high achieved earlier in May.

Technical Indicators and Future Outlook

The S&P 500 volatility index (VIX) remains subdued, reflecting broader market calm. For Bitcoin, analysts watch bid liquidity levels that could either stabilize prices or trigger further declines if broken. Some maintain bullish long-term views, citing continued accumulation by large holders despite recent price drops.

As the Fed prepares to release its meeting minutes, market participants await clues about future monetary policy. The interplay between employment data, inflation trends, and risk asset performance will likely determine Bitcoin's trajectory in coming weeks. With current projections showing only two rate cuts in 2025, the crypto market faces headwinds absent new bullish catalysts.