Bitcoin price prediction: BTC advances 0.4% as traders await dovish Fed outcome

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Bitcoin price prediction

Highlights

- Bitcoin trades above $116,800 as FOMC decision dominates market focus.

- Open interest rising confirms capital inflows supporting Bitcoin's September rally.

- BTC eye $120,000 if dovish Fed outcome weakens U.S. dollar.

The price structure highlights how September’s rally is reversing the weakness seen in August. The downturn last month had raised questions about whether Bitcoin was entering a deeper correction, but the sustained strength in September suggests that the August decline was more of a retracement within a longer-term bullish cycle. Prior to August, Bitcoin had posted four straight months of gains, and the renewed advance reinforces the idea that bullish momentum is resuming.

Bitcoin price dynamic (July - Sept 2025). Source: Tradingview

Attention now turns to the Federal Reserve, which concludes its policy meeting later today. A rate cut is widely expected, but the possibility of the central bank signalling a “third mandate for moderate interest rates” has gained market focus. If adopted, this would represent a more dovish long term shift in policy, potentially weakening the U.S. dollar while bolstering demand for alternative assets such as Bitcoin. Historically, FOMC announcements have triggered significant market volatility, and today’s decision could act as a catalyst for Bitcoin to test fresh highs, possibly even approaching its record peak at $124,500.

Bitcoin sentiment stays neutral despite bullish momentum into Fed policy meeting

Market internals add further depth to the analysis. Rising open interest this week shows that capital is flowing back into Bitcoin derivatives, providing confirmation that traders are engaging in the rally rather than stepping aside. However, the long-to-short ratio has declined, suggesting that while participation is increasing, positioning has become more balanced or tilted toward protective shorts. This combination reflects a market where optimism exists but is tempered by hedging activity, a dynamic that can slow the pace of advances while still underpinning the broader uptrend.

Meanwhile, the global retail “fear and greed index” has stayed in neutral territory despite the positive bias around today’s rate cut. This indicates that sentiment is not yet overheated, leaving room for further gains if a dovish Fed outcome provides the expected lift.

If Bitcoin secures a break above the five-week high at $117,400, the next significant target is the $120,000 psychological level. Beyond that, the all-time high at $124,500 comes back into view, a level that may be tested if monetary policy developments and positioning flows align in favor of crypto assets.

Bitcoin sharks add 65,000 BTC, showing conviction despite muted retail sentiment. Bitcoin open interest reflects this fresh positioning as September gains continue.

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