Bitcoin Dominance Nears Critical Peak as Fed Decision Looms: 5 Market Forces to Watch This Week
As the first full week of May unfolds, Bitcoin’s market position is facing a moment of truth. BTC dominance surged to 65%, nearing a level analysts say could mark a historic top. Meanwhile, the crypto market is bracing for major macroeconomic catalysts, particularly the Federal Reserve’s May 7 rate decision, which is expected to shape risk sentiment across global markets.
With Bitcoin trading around $94,251, investors are closely watching support levels, recession chatter, and the return of “FOMO” sentiment among retail participants. Here’s what’s driving the markets this week.
BTC Holds Key Support at $93,500 Amid Volatility
Despite weekend sell pressure that pushed BTC to $93,350, the flagship crypto rebounded quickly, showing resilience just above its 2024 yearly open at $93,500. Analysts say maintaining this level is vital.
“Bitcoin will need to hold the $93.5k range low to fully confirm a reclaim of the range,” noted analyst Rekt Capital.
CoinGlass data shows the next cluster of liquidity sits at $96,420, and some traders, including CrypNuevo, suggest BTC may eye a short-term push toward $98K, while CME futures show a “gap” around $97K — a magnet for price action in recent weeks.
Federal Reserve Decision Set to Drive Market Sentiment
The May 7 FOMC meeting is shaping up to be the most consequential economic event this week. Traders and analysts are eyeing not only the interest rate decision, but more importantly, Fed Chair Jerome Powell’s commentary.
“All eyes are on Fed Chair Powell this week after recent pressure from Trump to cut rates,” summarized The Kobeissi Letter.
Despite political pressure, markets are betting on no rate change. The CME FedWatch Tool places the probability of a cut at just 5.2%.
Volatility typically increases before FOMC announcements. Crypto analyst Michaël van de Poppe suggests a pullback to $91.5K–$92.5K could offer an attractive entry point if history repeats.
U.S. Recession Fears Hit Two-Year High
Beyond the Fed, market participants are grappling with rising fears of economic slowdown. New data shows 72% of Americans believe a recession is likely within the next 12 months — the highest figure in two years, up 8 percentage points since November 2024.
“All signs point to an economic slowdown,” Kobeissi warned, citing consumer pessimism and recent weak Q1 GDP figures.
Bitcoin has become increasingly sensitive to employment and growth data, making the May 8 jobless claims report and Coinbase’s earnings release additional volatility flashpoints.
Bitcoin Dominance Pushes Toward Final Leg — or Collapse?
Bitcoin’s share of the overall crypto market cap hit 65% — a level not seen since early 2021. Analysts believe BTC dominance could reach 71%, a historical ceiling that previously signaled major altcoin breakouts.
“The road to 71% continues on successful retest of 64%. But it is the Final Countdown,” said Rekt Capital.
This dominance has frustrated altcoin investors, but some argue it’s structurally different this time. Institutional buying from BlackRock and MicroStrategy has changed the game — “They just hold it. They don’t swap for altcoins,” noted Apollo co-founder Thomas Fahrer.
Investor Sentiment Flips as Fear of Missing Out Creeps In
While the Crypto Fear & Greed Index sits in neutral territory, the tone across social media has turned sharply more bullish. Santiment data reveals that after cautious price expectations in April, high BTC price predictions ($100K–$159K) now dominate discussions.
“This was the ideal buy time,” Santiment observed, referring to lower expectations between April 6–18.
But analysts warn of potential headwinds: if retail enthusiasm gets ahead of fundamentals, price stability could be threatened in the short term.
Bitcoin Dominance has one final leg left in its Macro Uptrend on the road to 71% (red)
Any dips into 64% would constitute a retest
Successful retest would enable final trend continuation on the road to 71% (green box)$BTC #Crypto #Bitcoin https://t.co/efhsgN49r4 pic.twitter.com/KbzjzSWZGp
— Rekt Capital (@rektcapital) May 3, 2025
Bottom Line
Bitcoin enters the week at a critical juncture. As the Fed decision, economic data, and institutional flows converge, BTC’s market structure faces a stress test. Whether dominance continues to climb or altcoins begin a breakout, one thing is clear — the market is bracing for a defining moment.
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