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(Bloomberg) -- Cryptocurrencies are poised to lose momentum in the coming days, beginning with the Federal Reserve’s policy decision Wednesday in which central bank officials are widely expected to raise rates by a quarter percentage point.

That’s according to an analysis by Arcane Research, based on the minute-to-minute rolling volatility of Bitcoin, the largest digital token by market value. The firm analyzed previous Federal Open Market Committee press conferences, finding that while Bitcoin’s price action in those periods has been less volatile since the central bank began hiking rates in early March, the Fed’s path remains unclear.

“The market is overly optimistic regarding a swift Fed pivot,” Vetle Lunde, senior analyst at Arcane Research, wrote. “A combination of slowing momentum, strong technical resistance and expectations of a hawkish FOMC leads me to expect a poor February in the market.”

The warning echoes the old adage of “don’t fight the Fed,” coined in 1970 by the late investor Martin Zweig, who was pointing out the strong correlation between Fed policy and the stock market.

Bitcoin rose as much as 2.1% on Tuesday and was trading at $23,108 as of 3:20 p.m. in New York. Other tokens have also gained, with an index of the 100 biggest coins adding around 0.2%. The rebound from last year’s deep rout is part of a wider revival in risk appetite on expectations that central banks will slow interest-rate hikes and perhaps even cut borrowing costs later this year as super high inflation moderates.

“Short-term, I am bearish as the crypto market strength seems over-extended across multiple metrics,” Lunde said, adding the constant short squeezes seen in the month have wiped out massive amounts of leverage. This, he said, has drained the token of fuel to rally further. “Long-term, I am steadfastly bullish as BTC reclaims pre-FTX trauma levels.”

Bitcoin has been trading in a tight range the past two weeks after reaching its highest level since August earlier in January as economic data continue to show inflation moderating and the Fed slowing its aggressive monetary tightening. For January, the coin has jumped nearly 40% to its strongest month since October 2021 amid renewed investor enthusiasm and the consensus expectation that the Fed will pause.

US stocks, meanwhile, are on track to notch a monthly gain as well. All eyes will be on Fed Chair Jerome Powell, who has has repeatedly pushed back against hopes of rate cuts later this year, in contrast to some central bank officials who has expressed the possibility of pausing rate hikes after the March meeting.

“The market is behaving as if Fed easing were already upon us. In other words, it tells us that risk-on is back. Not in a massive way just yet, but growing confidence that the US rates peak is close and that sentiment will continue to improve is encouraging investors to take on more risk in order to beat the rush for higher returns,” wrote Noelle Acheson, author of the “Crypto Is Macro Now” newsletter. “BTC in this case is trading like a high-risk macro asset – not what true believers would hope for, and not what (in my opinion) we will see later in the year.”

The coin’s 14-day relative strength index is now at 66. A reading of 30 or below is normally interpreted as an indication of an oversold security, while 70 or above signifies an overbought one. As a general rule, investors tend to avoid overbought securities, though such conditions have generally been bullish for Bitcoin.

Despite this year’s gains for cryptos, tokens remain extremely depressed compared with where they were trading at the heights of 2021’s bull run, when Bitcoin hit nearly $69,000. A survey by LendingTree found that of the 28% of Americans who have held some form of digital asset, nearly 40% have sold it at a loss.

“The experience over the last year has shown how risk works in both ways — it can drive appetite up, and it can also drive it down,” said Kara Murphy, chief investment officer at Kestra Investment Management.