The cryptocurrency market is on edge as investors anticipate the outcome of the Federal Open Market Committee (FOMC) meeting, which will decide on potential interest rate cuts. This decision could significantly impact market sentiment and price movements. In this article, we’ll explore the recent price action of Bitcoin (BTC) and the outperformance of Aave (AAVE), while highlighting the key levels to watch in the coming days. The Federal Reserve’s decision could lead to major price shifts, making the next few days critical for the market.

As always you can watch my full analysis in the video here or read my summary in the article below:

Federal Reserve Interest Rate Decision and Its Impact on Crypto

As of Wednesday, September 18, investors are focused on the upcoming FOMC announcement, where the central bank is expected to cut interest rates. The big question is whether the cut will be 25 basis points, 50 basis points, or possibly even 75 basis points, as suggested by some political figures like Elizabeth Warren. The cryptocurrency market is particularly sensitive to this news because lower interest rates tend to bring more liquidity into the market. Although rate cuts are not directly linked to crypto prices, the overall increase in liquidity usually has a positive effect on asset prices, including Bitcoin and altcoins.

Many traders believe that the market’s direction, especially for Bitcoin, hinges on this decision. A smaller cut may not be enough to spark a rally, while a larger cut could bring about renewed optimism and increased capital inflows. The outcome of this meeting will likely influence market behavior for the rest of the month.

Bitcoin Update

Bitcoin has been in a prolonged correction since mid-March, which has now become the longest correction during a bull market in crypto’s history. Despite being about 17% below its all-time high, sentiment in the market remains bearish. Many investors are unsure how to interpret the recent price action, especially with the uncertainty surrounding the FOMC decision.

Key Levels to Watch for Bitcoin

Bitcoin has been fluctuating between $58,000 and $61,000, but these aren’t the critical levels that traders should focus on. The key resistance level to break is $62,000, where the 100-day simple moving average is located. A break above this level would offer some relief to investors. However, the most important level remains $65,000, which served as a peak in August. If Bitcoin can push past this, it would indicate a higher high and potentially signal the end of the correction phase.

Failing to break through these levels could imply that momentum is lacking. The next few days of trading will be crucial in determining the market’s direction, especially in the wake of the FOMC decision.

Aave Outperforming Other Altcoins

While Bitcoin has struggled, Aave has shown strong performance over the last few months. Since hitting a low of $80 on August 5, Aave has rallied by over 85%, outperforming many other altcoins. Unlike Bitcoin and most other cryptocurrencies, Aave has even managed to surpass its March highs, which is an impressive feat. AAVE has climbed as high as $158 in recent days and is now trading around $143.

Despite this, Aave’s future growth largely depends on Bitcoin’s price action. The overall sentiment in the market remains negative, which has held Aave back from making a more substantial run. If Bitcoin is able to break its key resistance levels, it could open the doors for Aave and other altcoins to experience more significant gains.

If Bitcoin can rally past $65,000, it would likely act as a catalyst for Aave to continue its upward trend. Investor confidence would return, and altcoins could see increased inflows. However, if Bitcoin remains stuck below its key resistance levels, Aave may also struggle to make further gains in the near term.

Final Thoughts

The Federal Reserve’s decision will have a significant impact on the cryptocurrency market. A smaller 25 basis point cut may not be enough to trigger a bullish trend, but a 50 basis point cut or more could bring renewed liquidity and confidence to the market. The next 24 to 48 hours following the FOMC announcement will be crucial for determining the future direction of Bitcoin and altcoins like Aave.

As we await the FOMC’s interest rate decision, the next few days of trading will be pivotal for both BTC and AAVE. Investors should pay close attention to whether Bitcoin can break its key resistance levels, particularly $65,000, which could signal the beginning of a new bullish phase. Aave, with its recent outperformance, could benefit significantly from any positive movement in Bitcoin.

Patience and vigilance are essential as the market responds to this critical event.

Editor’s Note: Cryptocurrency has been the best returning asset class of the last decade and is know for its parabolic bull markets. It is also a key to a truly diversified portfolio and one of the best hedges against the potential risks that lie ahead in markets. But you need to act now before institutions gobble it all up.

If you’re worried you can’t figure out crypto… don’t be. Our in-house crypto expert, Alex Benfield, will walk you through everything you need to know about crypto, step by step.

To learn more about Alex’s new trading service, Crypto Trend Investor, click here.

This article previously appeared in Investing Daily.