Fed holds rates amid higher inflation outlook: Bitcoin bounces to $72K

Bitcoin’s pre-FOMC sell-off eased as the US Federal Reserve's choice to leave interest rates unchanged was followed by a swift bounce in BTC price.

Bitcoin’s (BTC) bullish start to the week faced a halt on Wednesday, as BTC dropped 3.4% to $70,900 alongside an overarching sell-off in US stocks. 

The correction followed a hotter-than-expected Producer Price Index (PPI) report, which was 0.7% higher than the 3.4% year-on-year estimate. Despite the selling, data shows BTC spot market demand holding steady, with buyers stepping in to absorb the selling pressure and proof of this appetite being reflected by Bitcoin reclaiming $72,000 after Federal Reserve minutes highlighted their decision to leave interest rates unchanged.

While the market consensus had tilted toward the Fed choosing to pause on interest rate changes, market volatility in oil prices, equity markets, and persistent tension over the recently started US and Israel-Iran war had traders on edge.

On the four-hour chart, Bitcoin shows a higher low pattern, keeping the short-term uptrend intact. The price action is holding above both the 100- and 200-period exponential moving averages (EMAs), which are acting as dynamic support.

These moving averages track the average prices over time and define the trend direction when aligned below the price.

The confluence may allow BTC to stabilize near $71,000, forming a potential base after today’s sell-off.

From a technical standpoint, BTC needs to defend the $70,250 to $71,275 range, which marks the internal liquidity levels built during Monday’s breakout.

This zone represents the areas where orders were previously filled, possibly attracting a liquidity sweep again.

Losing this range exposes the next liquidity pocket near $68,900. That level aligns with a small order block between $68,300 and $69,100, where prior demand briefly absorbed the selling pressure.

Maintaining these levels keeps the lower time frame trend structurally bullish for BTC, with higher lows signaling continued demand on dips.

Related: Bitcoin tests fresh decoupling trade as tech correlation drops to 2018 lows

Prior to today’s correction, Bitcoin onchain data pointed to rising sell-side activity from short-term holders (STHs) on Tuesday. According to crypto analyst Darkfost, over 48,000 BTC in profit moved to exchanges in a single day as the price approached $75,000. This indicated that the buyers continued to lock in gains, treating the price rebounds as exit opportunities.

At the same time, CoinGlass data shows passive bids being filled during the drop to $71,000 from $74,000. Similar absorption patterns over the past two weeks have preceded short-term recoveries, highlighting consistent demand at lower levels.

Meanwhile, BTC’s reaction to the previous Federal Reserve meetings added insight. Market analyst Sherlock said that since June, 2025, Bitcoin has declined after each of the last six Federal Open Market Committee (FOMC) meetings, regardless of rate direction.

With the markets pricing in another hold on interest rates, traders’ attention may shift to how Bitcoin price reacts around current liquidity clusters, especially near $71,000.

Related: Bhutan offloads an additional $72.3M Bitcoin amid market downturn

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Source: CoinTelegraph