Fed Rate Hold Looms: Policy Stimulus Reshapes Markets as BTC Tests Resistance

Policy Tailwinds Revive Risk Appetite Amid Geopolitical Optimism

China’s monetary authority unveiled a dual stimulus package that has triggered a notable shift in market sentiment. The People’s Bank of China announced a 0.5 percentage point reduction in the reserve requirement ratio alongside a 10 basis point cut in the policy interest rate to 1.4%, complemented by a 25 basis point decrease in housing provident fund rates. Simultaneously, trade negotiations resumed between Beijing and Washington, with Vice Premier He Lifeng scheduled to meet U.S. Treasury Secretary Benson in Switzerland from May 9-12.

This combination of fiscal accommodation and diplomatic developments has catalyzed a broad-based rally across risk assets. Pan Gongsheng, the central bank governor, framed these measures as supportive of economic expansion, prompting regional equity markets to surge and commodity futures—particularly iron ore and steel contracts—to post impressive gains.

Federal Reserve Decision: Status Quo Expected Amid Higher Rate-Cut Threshold

The global financial community faces a critical juncture as the U.S. Federal Reserve prepares to announce its interest rate decision on May 8 at 2 a.m. Eastern Time. CME’s rate probability tracker indicates the market is pricing in a 96.9% likelihood of the Fed maintaining rates at their current levels, with only a 3.1% probability assigned to a cut.

Goldman Sachs analysts led by Jan Hatzius contend that the Fed has effectively raised the bar for interest rate reductions. Policymakers now require substantially more convincing evidence of economic deterioration—specifically, hard labor market data demonstrating significant softening such as climbing unemployment rates and subdued wage growth—before taking action.

The consensus view reflects the Fed’s commitment to a data-dependent approach, signaling that near-term rate relief faces structural headwinds despite persistent political pressure for easier policy.

Bitcoin Navigates Regulatory Wins Amid Technical Consolidation

Bitcoin has reached a watershed moment on the legislative front. New Hampshire became the first U.S. state to enact “Strategic Bitcoin Reserve” legislation (HB 302), empowering state treasurers to acquire Bitcoin or digital assets with market capitalizations exceeding $500 billion. The authorized holdings cap is set at 5% of total reserve funds, opening a new chapter in institutional adoption.

Conversely, the UK’s Treasury Economic Secretary Emma Reynolds signaled that Britain will pursue a divergent path, declining to establish a national digital asset reserve. Instead, regulatory authorities will integrate crypto assets into existing financial frameworks, adhering to the principle of “equivalent risk, equivalent regulation.”

BTC Current Data: $88.04K (-9.56% year-to-date) | 24-hour spot volume: $560.71M | Market dominance: 54.98%

From a technical perspective, Bitcoin has remained range-bound for two weeks, facing formidable resistance near $99,000. Glassnode’s research identifies this zone as a substantial selling pressure point. FxPro analyst Alex Kuptsikevich flagged the critical support levels at $92,500 and $89,000, with the market having returned to the key resistance zone established from December through February. A breakdown below $90,000 would carry pronounced technical and psychological implications, potentially triggering a breach of the 200-day moving average.

Despite near-term consolidation, industry figures remain constructive. In recent remarks, a prominent exchange founder posited that Bitcoin may appreciate to $500,000-$1 million within the current market cycle, expressing particular enthusiasm for blockchain’s convergence with artificial intelligence and scientific research applications.

Ethereum Faces Headwinds as Network Upgrade Approaches

ETH Current Data: $2.97K (-12.87% year-to-date) | 24-hour spot volume: $261.16M | Market share: 11.23%

Ethereum continues to underperform Bitcoin on a year-to-date basis, declining 12.87% since the start of 2025. The scheduled Pectra upgrade deployment on May 7 at 18:05 UTC represents a pivotal development that may influence near-term trading dynamics.

The Ethereum market has experienced notable selling pressure, with liquidations totaling $67.67 million in the 24-hour period. Technical resistance remains entrenched, with the medium-term trend channel upper boundary positioned at $1,811.27 and support at $1,775.40.

Liquidation Cascade and Market-Wide Risk Indicators

Global liquidation activity surged to 1.135 million positions totaling $314 million in notional value over the preceding 24 hours. Bitcoin liquidations reached $98.26 million, underscoring the leverage concentration in the largest cryptocurrency. The Fear and Greed Index stands at 67, registering in “Greed” territory—a level historically associated with profit-taking and potential reversals.

Network gas efficiency remains favorable: Bitcoin averages 1 sat/vB while Ethereum hovers at 0.44 Gwei, facilitating cost-effective transaction execution.

Institutional Flows and ETF Positioning

Bitcoin and Ethereum spot ETFs recorded outflows during the period, with Bitcoin ETFs experiencing $85.63 million in redemptions and Ethereum products seeing $17.87 million withdrawn. This capital rotation suggests institutional investors are exercising caution ahead of the Fed announcement and geopolitical developments.

Sector Dynamics: Gaming and NFT Assets Under Pressure

The GameFi and NFT sectors both declined, posting losses of 2.83% and 2.96% respectively. These underperformances reflect broader risk-off sentiment within niche cryptocurrency segments, with investors gravitating toward core assets like Bitcoin and Ethereum.

Token Unlock Calendar and Upcoming Events

Several significant token unlock events loom, with Jito (JTO) unlocking 11.3 million tokens (approximately $20.4 million) on May 7, and Ethereum Name Service (ENS) releasing 1.45 million tokens (approximately $26.2 million) on May 8. Additionally, multiple altcoins are scheduled for new listings and protocol adjustments, potentially adding volatility to trading activity.

Institutional Adoption and Traditional Finance Integration

A financial services firm announced progress in bridging traditional and digital finance, enabling users to deposit Bitcoin and Ethereum to accounts through personal wallets, with minimum deposit thresholds of 0.0002 BTC and 0.001 ETH respectively. This development underscores accelerating institutional acceptance of digital assets within mainstream financial infrastructure.

Market Takeaways: Navigating Stimulus, Policy Divergence, and Technical Fragility

The coming 48 hours will likely prove consequential for crypto markets. China’s stimulus measures have temporarily restored risk appetite, yet the Fed’s anticipated rate hold and higher bars for future cuts suggest that macro tailwinds may be limited. Bitcoin’s technical setup near $99,000 resistance demands careful position management, particularly given elevated liquidation activity and ETF redemption pressure.

Investors should monitor the Fed announcement, Bank of England rate decision, and U.S. jobless claims data—three catalyst events that could either validate the current rally or trigger a retest of support levels below $90,000 for Bitcoin.