Bitcoin Dominance Climbs as FOMC Approaches, Analyst Warns of Imminent Volatility Spike

Bitcoin Dominance Hits Four-Year High Ahead of FOMC Meeting, Volatility Expected to Surge

Bitcoin (BTC) dominance has surged as the market prepares for the Federal Open Market Committee (FOMC) meeting, with analysts predicting a potential burst of volatility in the coming days.

As anticipation builds ahead of the Federal Reserve’s next decision, Bitcoin’s market dominance has reached a four-year peak. The leading cryptocurrency’s price has remained steady, fluctuating slightly between the $94,000 and $95,000 mark, with a modest 0.4% increase over the past 24 hours.

In contrast, altcoins have struggled. The broader CoinDesk 20 Index recorded a 0.7% decline, dragged down by significant losses in coins like Ethereum (ETH), Aptos (APT), and Sui (SUI). This shift signals a growing flight of capital into Bitcoin, as traders seek stability in the lead-up to the FOMC meeting scheduled for May 7.

Traditional markets have also shown weakness, with the S&P 500 and Nasdaq both closing down by 0.7%-0.8%. This underperformance highlights the growing appeal of Bitcoin as an alternative investment in a volatile economic environment.

Bitcoin’s dominance now sits at more than 65%, the highest level since January 2021, suggesting that capital is consolidating into BTC ahead of major decisions in traditional financial markets. Joel Kruger, market strategist at LMAX Group, noted that investors are in a holding pattern as they wait for signals from the Fed, with potential volatility driving the next wave of market action.

“Investors are clearly focused on the upcoming Fed meeting, and the broader market is bracing for volatility,” said Kruger. “While Bitcoin’s price has been stable recently, the underlying conditions suggest that significant price moves could be ahead.”

A Surge in Bitcoin Volatility Looms

According to Vetle Lunde, Head of Research at K33, Bitcoin’s recent stability masks an impending surge in volatility. The cryptocurrency has experienced unusually low volatility in the past week, with 7-day volatility hitting its lowest point in over a year. However, Lunde emphasized that low volatility periods in Bitcoin’s history are often short-lived, and when movements do occur, they can be sharp.

“Low volatility periods tend to be followed by rapid, directional moves,” Lunde explained. “With market conditions in flux, the risk of a significant price swing is high, particularly once FOMC announcements start to move the broader markets.”

Although Lunde does not foresee a drastic drop in Bitcoin’s price, he pointed out that these quiet periods often offer strategic opportunities for long-term investors. His advice: “Maintain aggressive spot exposure as Bitcoin prepares for its next major move.”