Bitcoin rose slightly on Wednesday, steadying from recent gains as traders looked to the Federal Reserve’s upcoming interest rate decision for more direct cues on monetary policy and the U.S. economy. 

The world’s largest cryptocurrency hit a near one-month high on Tuesday, as it recouped some losses logged in late-August. Broader crypto prices also advanced this week, taking advantage of improving risk appetite as markets bet on a U.S. rate cut.

But gains in crypto were held back by emerging doubts over the corporate treasury strategy. 

Bitcoin rose 0.5% to $116,552.0 by 01:23 ET (05:23 GMT). 

Fed rate cut, Powell outlook in focus 

The Fed is widely expected to cut interest rates by at least 25 basis points at the conclusion of a meeting on Wednesday, with some traders also holding out for a 50 bps cut. 

Expectations for a rate cut were furthered chiefly by increasing signs of a cooling U.S. labor market, which was a key consideration for the Fed in cutting rates. 

But recent signs of sticky U.S. inflation left markets uncertain over what the Fed’s outlook for monetary policy could be. Chair Jerome Powell has repeatedly flagged caution over the inflationary effects of higher U.S. trade tariffs, and is expected to weigh in on this notion later on Wednesday. 

Still, lower U.S. rates bode well for crypto given that they usually open up more liquidity that can then be deployed into speculative markets. Crypto’s 2021 bull cycle was driven chiefly by ultra-low U.S. rates in the aftermath of the COVID-19 pandemic. 

Bitcoin exchange reserves fall, stablecoin levels rise 

The amount of Bitcoin on centralized exchanges dropped to its lowest level since January 2023 this week, data from CryptoQuant showed.

The trend indicates that an increasing amount of Bitcoin was being taken out of active trade and into private storage– heralding less severe selling pressure on the crypto. 

Data from CryptoQuant also showed stablecoin balances on exchanges were rising– indicating that active liquidity was building up. 

The “dry powder” could highlight investors were positioning for more buying action in the coming days, which in turn points to potential price gains for crypto markets. 

Crypto price today: altcoins muted as Fed looms 

Broader crypto prices moved in a tight range on Wednesday, with traders keeping to the sidelines ahead of the Fed decision. 

World no.2 crypto Ether fell 0.8% to $4,492.59. XRP rose 0.4% to $3.0152. 

Solana fell 0.9%, while Cardano rose 1.1%. 

Among meme coins, Dogecoin fell 0.8%, while $TRUMP rose 0.2%.