BTC slips crucial support as Fed’s hawkish tone weighs on market sentiment

Bitcoin (BTC) is trading below $71,000 at the time of writing Thursday, down nearly 4% so far this week and slipping below a key support zone. Institutional demand is also showing early signs of weakness as US-listed spot Bitcoin exchange-traded funds (ETFs) recorded light outflows on Wednesday, snapping a seven-day streak of inflows. Meanwhile, risk sentiment has dampened following the Federal Reserve’s (Fed) hawkish tone in its March monetary policy decision, further weighing on the Crypto King’s price.

Fed’s hawkish tone weighs on BTC price

Bitcoin is trading in the red for the third straight day so far this week, erasing Monday’s gains and slipping below $71,000 during the early European trading session on Thursday.

The price pullback is further fueled by the Fed’s hawkish tone on Wednesday, when the US central bank kept interest rates unchanged at 3.50%-3.75% after its March meeting.

In fact, the US central bank raised the year-end personal expenditure price (PCE) inflation outlook to 2.7% from 2.4% in December, citing risks of higher energy prices due to the Iran war. The Fed also upgraded its 2026 growth projection, forecasting only one rate cut this year, and one in 2027.

This hawkish tone boosted the US dollar (USD), while dampening risk appetite and weighing on risky assets such as Bitcoin, which lost 3.6% on the day.

In an exclusive interview, Lacie Zhang, Research Analyst at Bitget Wallet, told FXStreet: “A hawkish stance from the Fed, where rates remain unchanged but the dot plot moves from two cuts to one, possibly delayed to July, is likely to be a mild short-term headwind for Bitcoin.”

Zhang continued, “The issue is not the hold itself, which is largely priced in, but the signal that the Fed has less flexibility to ease amid rising inflation risks, particularly driven by higher energy prices linked to tensions in the Middle East. This keeps macro liquidity expectations constrained, which typically limits BTC upside in the short term. BTC may regain momentum, but if inflation persists, the Fed could be in a long wait-and-see mode remains, extending the current ceiling on crypto markets.

Institutional demand records a mild outflow

Institutional demand for Bitcoin is showing early signs of weakness. Spot Bitcoin ETFs recorded light outflows of $129.60 million on Wednesday, breaking a seven-day inflow streak, according to Coinglass data. If this outflow trend continues and intensifies, BTC may undergo further correction in the coming days.

Meanwhile, the Arkham data shows that a dormant whale wallet sold another 1,000 BTC on Wednesday, worth $71.5 million. This wallet accumulated 5,000 BTC about 13 years ago, sold almost 3,500 BTC and still holds about 1,500 BTC, worth about $106.8 million.

One bounce does not make a bull

Bitcoin price has shown some signs of resilience over the past week, compared to gold and stocks amid the Iran war.

Glassnode’s weekly report on Wednesday said that while the breakout above $70,000 and subsequent move into the ($72K to $82K) gap is encouraging, a single constructive price push falls short of confirming a decisive structural shift.

The analyst went on to explain that historically recovery from deep bear markets to early bull market conditions has been validated by investor profitability, as shown in the chart below.

“The recent price move has lifted this benchmark to around 60%, a level consistent with comparable early bounces in previous cycle bottoms, where market exhaustion at first recovery attempts has been a common feature. A sustained push above 75% will carry significantly more weight as confirmation of early bull market conditions, while continued rejection near current levels will reinforce the bear market recovery,” the analysts said.

Meanwhile, the report also highlighted that the Chicago Mercantile Exchange’s (CME) futures positioning remains muted, indicating that the recovery is driven primarily by spot flows rather than leveraged speculation.

Bitcoin Price Prediction: BTC Slips Below Key Support

Bitcoin’s price is extending its correction, trading below $71,000 on Thursday, down nearly 4% so far this week. The short-term bias is slightly bearish as prices hold within a parallel channel, with its upper bound near $72,600 continuing to limit advances. BTC failed to find support around the previously broken 50-day exponential moving average near $72,800, and this could weigh on recovery attempts.

The relative strength index (RSI) on the daily chart at 49 is leaning slightly below its midline, suggesting that momentum has faded after the recent bounce, while the moving average convergence-divergence (MACD) indicator remains in positive territory, but its line has slipped to the signal line, indicating weakening upside pressure-in the broader downward pressure within the broader downward pressure.

Immediate resistance emerges around the channel top at $72,600, with the 50-day EMA almost converging around $72,800 to form a stronger barrier; a daily close above this zone would be needed to challenge Monday’s high at $76,000.

On the downside, initial support is near the channel midpoint at $69,200, followed by the recent swing low at $65,900, where the channel’s lower boundary is anchored. A break below $65,900 will extend the corrective phase to lower levels, while holding above this band keeps the pair in a limited consolidation.

(The technical analysis of this story was written using an AI tool.)