Bitcoin Slides as Fed Signals Higher-for-Longer Rates

Channel support in focus as RSI divergence signals weakness

Crypto markets trended lower throughout the week, weighed down by lingering uncertainty from the US–Iran conflict and fading expectations of a Fed rate cut. After reaching a high of $79,500 during Monday’s trading session, Bitcoin pulled back toward support, with the sharpest move following the Fed press conference.

The rate remained unchanged, at 3.50% – 3.75%, but this was largely anticipated and was not the main reason for Bitcoin’s drop. Rather, the Fed’s messaging was the catalyst. During his last press conference as Federal Reserve Chair, Jerome Powell signaled a higher-for-longer stance, emphasizing that the Fed is in no rush to cut and that inflation will be closely monitored. At the time of writing and according to the CME FedWatch tool, barring negligible chances, the Fed will not cut the rate in 2026.

Jerome Powell announced that he will remain on the Board as Governor and will continue to fight for the Fed’s independence. During the latter part of his term as Fed Chair, he clashed with President Trump, who repeatedly called him “Too Late” Powell, mainly because of the Chair’s unwillingness to cut rates at the pace desired by the President.

The prospect of a ‘higher for longer’ interest rate hurts risk assets due to lower liquidity and a sentiment shift towards safe-haven assets. This is also reflected in the most recent Bitcoin ETF activity, which saw three straight days of outflows, totaling more than $490 million.

In the meantime, the US and Iran have not reached a compromise yet, with both parties blockading the Strait of Hormuz. At the time of writing, there are no plans for a new round of peace talks, and Oil is trading near wartime highs.

Chart Analysis – BTC/USD

Bitcoin is testing the lower boundary of the ascending channel again, and the bulls seem to have lost short-term control. A break of the current bullish trend line (lower border of the channel) could send Bitcoin spiraling toward the $71K support zone.

The RSI was very close to overbought in late April, and it showed bearish divergence (although it was a rather weak signal): the price made a higher high while the indicator only printed a double top. Either way, the RSI coming close to overbought was a technical signal, which, combined with the risk-off sentiment, created an opportunity for the bears.

A rebound at the current support, followed by a break of the recent high, would put control back into the bulls’ hands. But for this to happen, Bitcoin would need either some good news coming from the Middle East or positive advances regarding the CLARITY Act.