Bitcoin Dominance Hits 4-Year High Ahead of Fed Decision

Bitcoin (BTC) extended its market dominance on Tuesday, reaching a four-year high as traders positioned themselves ahead of the Federal Reserve's upcoming policy decision. The leading cryptocurrency held firm around the $94,000 to $95,000 range, posting a modest 0.4% gain over 24 hours, while continuing its tight trading pattern since the weekend.

In contrast, the broader crypto market saw a slight pullback. The CoinDesk 20 Index dropped 0.7%, weighed down by declines in Ethereum (ETH), Sui (SUI), Aptos (APT), and Polygon (POL). Traditional markets also remained under pressure, with the S&P 500 and Nasdaq falling 0.7% and 0.8%, respectively, further highlighting Bitcoin’s relative strength.

Bitcoin’s market dominance surged past 65%, its highest level since January 2021, according to TradingView. This growing share underscores investors' preference for BTC amid macroeconomic uncertainty, with many viewing it as the most resilient digital asset.

Joel Kruger, market strategist at LMAX Group, noted the market's calm as traders await the U.S. Federal Open Market Committee (FOMC) announcement. While the Fed is expected to keep rates steady, any shift in Fed Chair Jerome Powell’s tone could stir market sentiment.

Vetle Lunde, head of research at K33, highlighted that BTC’s short-term volatility is at its lowest in over 560 days. Such compressed volatility often precedes sharp price movements, as leveraged positions unwind and traders re-enter the market. Lunde emphasized that current negative funding rates and historical trends suggest this may present a favorable entry point for long-term investors, recommending increased spot exposure in anticipation of a volatility spike.

Overall, Bitcoin continues to outshine the broader crypto and equity markets, with traders watching closely for tomorrow’s Fed decision.