Bitcoin Price Prediction Ahead of Fed’s First 2026 Rate Decision

Bitcoin price suffered a big reversal this week, erasing all the gains made earlier this week. It has crashed from the year-to-date high of $97,957 on January 14 to a low of $87,400.

The article explores expectations for the Federal Reserve’s first interest rate decision of the year. The decision will happen on Wednesday next week.

Bitcoin Price to React to Federal Reserve Interest Rate Decision

The main catalyst for Bitcoin and other altcoins will be the upcoming Federal Reserve interest rate decision. This will likely set the tone for what to expect later this year.

Polymarket data shows that most traders expect the bank to maintain interest rates intact between 3.5% and 3.75%. This decision will be in line with the dot plot that accompanied the last decision in December. It pointed to just one rate cut this year.

The most recent macro data show no need to cut interest rates. Donald Trump continues to apply pressure.

Data released on Thursday showed that the American economy expanded by 4.4% in the third quarter. It’s higher than the previous estimate of 4.3%.

Economists also expect that the economy expanded by 5% in the fourth quarter. This will bring the full-year growth rate to over 2%. More data showed that the unemployment rate remained above 4%, while inflation was stuck above 2.5%.

A Polymarket poll estimates that the Federal Reserve will deliver three rate cuts this year. Therefore, a sign that the Fed is willing to deliver more interest rate cuts this year will be bullish for Bitcoin. At the same time, a more hawkish tone will lead to lower prices.

SCOTUS Decision on Trump Tariffs

The other key catalyst for the BTC price next week will be the Supreme Court. This will likely deliver its decision on Donald Trump’s tariffs.

Most traders on Polymarket and Kalshi expect that the court will rule against the Trump administration. It’s a move that may provide some relief to Bitcoin and other risky assets.

However, the relief would be short-lived as the Trump administration has been crafting alternative policies to achieve similar tariff goals.

For example, Trump may launch investigations and impose up to 15% tariffs using Section 122 of the Trade Act of 1974. The main challenge with this approach is that the tariffs can only remain in place for 150 days.

Alternatively, he may use Section 232 of the Trade Expansion Act of 1962. This approach allows him to impose tariffs on products seen as a threat to national security. Analysts believe that this will be his preferred option as he will frame imports as national security threats.

The other potential catalysts for Bitcoin ETF inflows and outflows. One main reason why the coin struggled this week has been the ongoing Bitcoin ETF outflows.

Data shows that spot Bitcoin ETFs shed over $32 million in outflows. That’s lower than the $702 million they shed on Wednesday. In total, Bitcoin ETFs have shed over $1.5 billion in the last four market days.

Bitcoin Price Technical Analysis

The daily chart shows that the Bitcoin price could be at risk of a strong bearish breakdown in the coming weeks. It has formed a big bearish flag pattern.

That’s made up of an ascending channel and a vertical line. It is now in the process of forming the flag section, meaning that the coin may drop sharply soon.

The coin has moved below all moving averages and the Supertrend indicator. Additionally, the coin is hovering at the Ultimate Support level of the Murrey Math Lines tool.

Therefore, the most likely BTC price forecast is bearish, with the next main target being the November low of $80,400. A move below that level will point to more downside in the coming weeks.

A move above the Strong Pivot Reverse of the Murrey Math Lines at $93,650 changes the trend. It invalidates the bearish outlook.