Bitcoin has once again found itself under pressure, slipping below the $108,000 mark as the broader market struggles with a lack of clear catalysts to spark volatility. With Federal Reserve interest rate cut expectations steadily diminishing ahead of the release of May’s Fed meeting minutes, crypto investors and traders are facing a cautious environment, marked by waning optimism and subdued risk appetite.
Market Context: The Vanishing Rate-Cut Optimism
As of May 28, Bitcoin (BTC) experienced a sell-off coinciding with the opening of the U.S. stock markets, a move reflecting the broader sentiment across risk assets. Data from sources like Cointelegraph Markets Pro and TradingView tracked BTC/USD dipping under $108,000, flirting with levels unseen for several days.
One of the main drivers behind this downturn is the shifting outlook on U.S. monetary policy. The CME Group’s FedWatch Tool has revealed a steady decline in the probability of interest rate cuts before September, a development that removes one of the key expected tailwinds for Bitcoin and other risk-linked assets such as stocks and altcoins. Earlier in the year, markets were pricing in multiple rate cuts to ease financial conditions, but these bets have been steadily pared back.
Supporting this view, prediction platform Kalshi reported that the market now anticipates just two rate reductions throughout 2025, a steep drop from the four cuts expected as recently as April. This loss of faith in an imminent Fed easing has understandably dulled bullish momentum in crypto markets.
A Glimmer of Hope: Labor Market Signals
Despite the grim near-term outlook on interest rate cuts, some analysts still spot potential for a positive surprise in the months ahead. Trading analysis newsletter The Kobeissi Letter highlighted that consumer sentiment around the U.S. labor market is signaling possible weakness, which historically has preceded rises in unemployment.
Specifically, the perception of job availability among consumers has declined over the past three years, and in previous economic cycles, such data tended to predict increasing unemployment rates. The newsletter suggested that this shift in labor market sentiment could eventually pressure the Federal Reserve to act sooner than the current market consensus expects, possibly bringing forward the timeline for rate cuts.
If the unemployment rate does climb as the data suggests, it could inject a dose of optimism back into crypto and risk assets, reversing the recent downtrend.
Bitcoin Price Dynamics and Volatility Drought
Bitcoin’s recent price moves have been characterized by a gradual erosion of bid liquidity, meaning fewer buy orders exist to support prices at key levels. This thinning of bids was flagged earlier by trader TheKingfisher, who warned that a breach of these liquidity zones could trigger a cascade of further declines.
At the same time, a significant “wall” of short liquidations has formed just above the $108,900 to $109,200 range. This creates a complicated dynamic, where pressure to cover shorts could, in theory, support short-term price rebounds. However, the absence of any strong external news or macroeconomic data to spark fresh market interest has left Bitcoin caught in a rangebound pattern since it peaked near $112,000 earlier this year.
Trading firm QCP Capital underscored this stagnation, noting a general decline in volatility across multiple asset classes. Markets seem to be in a holding pattern, absorbing a steady stream of negative headlines without the usual sharp price reactions seen in past cycles. The relentless news flow has seemingly lost its impact, creating an uneasy calm ahead of potentially market-moving releases.
What’s Next for Bitcoin?
For Bitcoin to break free from this sideways shuffle and reclaim momentum, market participants will be watching the upcoming Federal Reserve minutes closely. Clear signals of future monetary policy easing could reignite buying interest, while continued hawkish rhetoric would likely keep BTC under pressure.
Meanwhile, traders are advised to stay vigilant for any changes in labor market data that might hint at economic softening. Should unemployment indicators confirm weakness, the resulting policy response could provide Bitcoin and broader risk assets with a much-needed catalyst.
Until then, Bitcoin remains vulnerable to further dips, as investors grapple with diminished expectations for rate cuts and a market lacking clear directional drivers.
