Bitcoin Hits $65k, But Fed Decision Could Ruin the Rally

Bitcoin reclaimed the $65,000 level on Monday as markets found relief from cooling geopolitical tensions. A temporary pause in hostilities between the United States and Iran led to a drop in oil prices, which helped investor confidence across risk assets. Ethereum also saw gains, climbing 4% to reach $1,964.

Despite the positive price action, the crypto market remains on edge ahead of Wednesday's Federal Reserve interest rate decision. Recent spikes in energy costs have forced traders to rethink their outlook on inflation and interest rates. Market participants are now weighing the chance of an unexpected rate hike, which would typically create a difficult environment for assets like Bitcoin.

Even if the Federal Reserve decides to hold rates steady, the tone of their official statement will be vital. If officials suggest that energy prices are keeping inflation too high, it could still dampen interest in crypto. A more relaxed stance, however, might allow this relief rally to continue.

Investors should prepare for further swings throughout the week. Following the Fed meeting, new economic data on GDP and consumer spending arrives on Thursday. These reports will provide a clearer picture of whether the economy is growing too fast for the central bank to justify stopping their current interest rate policy.