The upcoming Federal Reserve meeting is unlikely to deliver an interest rate cut, but any dovish language from Chair Jerome Powell could trigger a Bitcoin rally, according to a new analysis from QCP Capital.
The report highlights a major economic shift as the U.S. moves away from “fiscal dominance” toward deficit reduction under the Trump administration.
Global Liquidity Conditions Could Drive Next Bitcoin Move
The QCP analysis suggests that cryptocurrency prices historically lag behind shifts in global liquidity conditions.
This raises the possibility that Bitcoin could see a “renewed leg higher after this correction” in response to changing monetary environments worldwide.
With a potential Federal Reserve pivot on the horizon and fresh stimulus injections from both Europe and China, the macro backdrop may be shifting in favor of risk assets.
Germany’s upcoming key vote and fiscal expansion plans, alongside similar measures in China, have powered stronger equity performance in these regions relative to the United States.
This divergence in economic policy approaches could influence capital flows across global markets in the coming months.
The report notes that market attention has temporarily shifted away from U.S. tariff headlines toward geopolitical developments, particularly in the Middle East.
This change in focus has benefited traditional safe-haven assets like gold, which have surged past $3,000, while Bitcoin has moved in the opposite direction.
Market Sentiment Swings Create Trading Opportunities
Market sentiment has become increasingly volatile in recent months, swinging from extreme bullishness to extreme bearishness in remarkably short timeframes.
According to data from The Kobeissi Letter, the S&P 500 has moved an average of $600 billion per trading day since February 19th.
Crypto markets have experienced sentiment shifts, moving from “Extreme Greed” to “Extreme Fear” in just six weeks.
This volatility in investor psychology has created potential opportunities for traders.
The quick deterioration in market sentiment following February’s peak was notable for both its severity and speed.
The Fear & Greed index reached “Extreme Fear” within just 15 days from the market top—the lowest reading since the 2022 bear market and the fastest drop since the 2020 pandemic crash.
This occurred despite the S&P 500’s correction being limited to approximately 10%, which The Kobeissi Letter describes as “a NORMAL and healthy correction.”
The disconnect between actual market performance and sentiment levels suggests investors may be overreacting to short-term movements.
For cryptocurrency investors, these sentiment indicators may provide valuable insights.
The Kobeissi Letter notes that crypto markets reached “extreme fear levels not seen since the 2022 and 2020 bottoms” just last week, after having traded at “their highest greed levels in HISTORY just 2 months ago.”
Fed Decision Could Provide Clarity
The upcoming Federal Reserve meeting could be important for Bitcoin and overall markets as investors seek clarity on the future path of monetary policy.
While QCP Capital views an immediate rate cut as “highly unlikely,” the report suggests that any dovish signals from Powell could serve as the catalyst that sparks upside momentum for Bitcoin.
The current context for the Fed’s decision making has shifted considerably. The U.S. has moved away from fiscal dominance toward a greater focus on deficit reduction under the Trump administration.
