Bitcoin (BTC) tightened its grip on the crypto market on Tuesday, with dominance surging to fresh four-year highs as traders rotated into the market’s anchor asset ahead of tomorrow’s key Federal Reserve policy meeting.
BTC held steady around the $94,000-$95,000 area, registering a modest 0.4% increase over the past 24 hours and extending a tight-range trading pattern that has persisted since the weekend.
Meanwhile, the broad-market CoinDesk 20 Index experienced a 0.7% decline, with Ethereum’s ether (ETH), along with native tokens of Sui (SUI), Aptos (APT), and Polygon (POL), dragging the benchmark lower.
A check on traditional markets revealed stocks booking back-to-back losses, with the S&P 500 and the tech-heavy Nasdaq closing 0.7%-0.8% down, once again underperforming BTC.
Despite the lack of major price action, the focus has increasingly turned to Bitcoin’s growing share of the overall crypto market. The Bitcoin Dominance metric surpassed 65%, its highest reading since January 2021, according to TradingView data. This signals capital consolidating into the asset perceived as the most resilient in the face of macroeconomic uncertainty.
Joel Kruger, market strategist at LMAX Group, described the current landscape as one of pause and anticipation. “The cryptocurrency market has remained largely stagnant since the weekly open, with prices settling into a holding pattern as investors await a pivotal catalyst,” he noted. “This impetus may arise from traditional markets, driven by updates on tariff-related economic impacts or the Federal Reserve’s anticipated FOMC decision on May 7.”
The Federal Reserve is widely expected to hold interest rates steady, according to the CME FedWatch Tool. However, traders remain on edge for any shifts in Fed Chair Jerome Powell’s tone that could impact risk appetite.
Bitcoin Volatility Burst on the Horizon
With Bitcoin’s recent price action being extremely flat, the upcoming FOMC meeting is predicted to cause significant volatility, according to Vetle Lunde, head of research at K33. He pointed out in a Tuesday report that BTC’s short-term volatility is “abnormally compressed,” with the 7-day average dropping to the lowest level seen in 563 days.
“Such low volatility regimes in BTC tend to be short-lived,” Lunde stated. “Violent volatility outbursts typically follow forms of stability once prices start to move, as leveraged trades are unwound and traders are reactivated into the market.”
He concluded that a significant cascade lower is unlikely, as funding rates for perpetual swaps are consistently negative. Historically, similar periods have offered valuable buying opportunities for medium and long-term investors, leading Lunde to favor “aggressive spot exposure” ahead.
