Bitcoin bears are in control following Wednesday’s Fed’s “hawkish pause.”

The Fed kept interest rates unchanged at 5.0-5.25% as expected, but BTC prices are still down about 2.5% on the day and recently fell below the key support level of mid-$25,000. Although the Fed chose not to raise interest rates for the 11th consecutive time on Wednesday, analysts viewed the policy statement as hawkish.

The updated dot plot, which summarizes Fed policymakers’ expectations for where interest rates will be over the next few years, showed rates are expected to rise to 5.6% by the end of the year.

That’s a big leap from the previous dot plot, in which the median forecast among Fed policymakers was for rates to hit 5.1% by the end of 2023.

Fed tightening bets jump

Markets have responded by reducing bets on a rate cut before the end of the year and increasing bets on rates ending the year above current levels.

For example, people last saw a 45% chance that rates would be between 5.25-5.5% by year end, up from nearly 36% a day earlier, according to the CME’s FedWatch tool.

That weighed on short-term government debt, with the 2-year yield hitting 4.8%, its highest since mid-March.

Meanwhile, the U.S. dollar index rebounded from its session lows.

Meanwhile, Bitcoin has come under pressure due to its negative correlation with the U.S. dollar and U.S. yields.

A stronger dollar means bitcoin, priced in dollars, becomes more expensive for foreign buyers.

At the same time, higher yields increase the opportunity cost of holding non-yielding assets like Bitcoin.

Bitcoin is about to break below this key support area

Bitcoin is facing a precarious moment right now.

The price has just fallen below the critical long-term support in the $25,200-$400 area and is also exploring a breakout from the uptrend that has been in play since late 2022.

A daily close below these levels is needed to confirm a breakout.

If that happens, technicians fear that Bitcoin’s next stop could be the 200-day moving average at $23,688.

Beneath this, the next major support area is the March low around $19,600.

Bitcoin’s decline comes as the widely followed weekly Moving Average Convergence Divergence (MACD) indicator recently flashed a rare signal.