Earlier in the week, Bitcoin (BTC) prices succumbed to seller pressure and fell to $81,300 at the time of writing, from $84,500 on March 17th. This downward move was a sale related to the two-day Federal Open Market Committee (FOMC) meeting, which will be held from March 18-19.
Federal Open Market Committee (FOMC) meetings tend to act as market resets. Crypto Markets Brace for Impact every time the FOMC meets to deliberate on US monetary policy.
Historically, traders have been able to eliminate risks and reduce leverage ahead of the announcement, and after a meeting and press conference from Federal Reserve Chair Jerome Powell, the market can respond similarly.
The press release from the current FOMC meeting, scheduled for 2:30pm ET on Wednesday, March 19th, could trigger a major movement in the Bitcoin market. Analyzing market behavior leading to releases could provide clues as to Bitcoin’s next move.
For traders, FOMC means volatility
Traders are closely monitoring FOMC minutes for changes in the Fed’s stance on inflation and interest rates.
After the FOMC announcement, Bitcoin prices tend to respond sharply. Since the beginning of 2024, BTC prices have fallen primarily after FOMC decided to maintain the fees, as seen in the chart below.
A notable exception was the Herbing Glory in February 2024. This coincided with the launch of the first spot BTC ETF. On September 18, 2024, Bitcoin recovered when US interest rates were cut on November 7, 2024.
However, the third cut on December 18, 2024 did not yield the same results. A 25 basis points reduction in the 4.50%-4.75% range marked the price of local Bitcoin at $108,000.
BTC/USD 1 day chart with FOMC dates. Souce: Marie Poteriaieva, TradingView
Except this time, we will put the Delage on the market before FOMC.
An important indicator that provides insight into market sentiment is Bitcoin’s open interest. This is the total number of unsettled derivative contracts, mostly one dollar, a permanent future.
Historically, Bitcoin fell before the FOMC meeting, indicating that traders are reducing leverage and risk exposure, according to graphs based on Coinglass data.
Bitcoin futures open interest and FOMC dates. Source: Marie Poteriaieva, Coinglass
However, another pattern emerged this month. Despite Bitcoin’s $12 billion open interest shakeout earlier this month, there was no significant decline in Bitcoin’s open profits in the days before FOMC. However, BTC prices have fallen, which is unusual and could indicate a strong directional bet.
This could also be a sign that traders are less worried about the Fed’s decision and are likely expecting a neutral outcome. Supporting this view, the CME group’s FedWatch tool shows a 99% chance that the FRB will maintain between 4.25% and 4.50%.
If prices remain unchanged, Bitcoin prices may continue to be in the current downward trend. This may be exactly what high lipid whales were hoping for when they opened up a 40x leveraged short position, over $500 million at their peak. However, this position is closed.
Related: Bitcoin Under $85,000 – Important BTC Price Levels to Watch Before FOMC
How does Spot Bitcoin ETF respond?
Unlike Bitcoin Zilla, its spot Bitcoin ETF investors have historically offloaded BTC holdings before the FOMC meeting.
According to Coinglass data, since the Spot BTC ETFS launched in January 2024, most FOMC events have coincided with ETF spills or at best a modest influx. A notable exception was the highest ever high in January 2025. Even Bitcoin ETF investors could not resist the impulse to buy.
Bitcoin Spot ETF Net Inflow and FOMC Dates. Source: Marie Poteriaieva, Coinglass
On March 17, Spot Bitcoin ETF saw a net inflow of $275 million, marking a shift from the one-month outflow. This could indicate a shift in investors’ sentiment and expectations regarding the Fed’s policy decisions.
If Spot ETF inflows are rising before the FOMC, investors may expect a more stubborn attitude from the Fed, including future fee cuts and maintaining liquidity-friendly policies.
Investors may also be loading Bitcoin as a hedge against uncertainty. This suggests that some institutional investors believe Bitcoin will work well regardless of the Fed’s decision.
Investors may also expect a shorter aperture. If traders were expecting Bitcoin to drop and place in a short position, a sudden increase in ETF inflow could play a role in the trader’s behavior and cause a short squeeze.
Following the FOMC, along with BTC price action and Onchain data and SPOT ETF flows, we show whether recent activity is part of a long-term accumulation trend or simply speculative positioning.
However, one thing many traders agree now is that BTC can experience significant price transfers after the announcement of FOMC. As Crypto Trader Master of Crypto put in a recent X post:
“The FOMC is tomorrow and we are looking forward to seeing big moves.”
Even without interest rate cuts, the possibility of the Fed publishing interrupted statements can raise the market, but their absence could potentially lower prices.
This article does not include investment advice or recommendations. All investment and trading movements include risk and readers must do their own research when making decisions.
