Firstly of the week, Bitcoin (BTC) price succumbed to strain from sellers, declining from $84,500 on March 17, to $81,300 on the time of writing. This downward motion was most certainly a sell-off associated to the Federal Open Market Committee’s (FOMC) two-day assembly, which takes place on March 18-19.
Federal Open Market Committee (FOMC) conferences are inclined to act as market resets. Every time the FOMC meets to deliberate on US financial coverage, crypto markets brace for impression.
Traditionally, merchants de-risk and cut back leverage forward of the announcement, and after the assembly and press convention from Federal Reserve Chair Jerome Powell the markets can be equally reactive.
The press launch of the present FOMC assembly scheduled for Wednesday, March 19, at 2:30 pm ET, and it might set off main actions within the Bitcoin market. Analyzing market conduct resulting in its launch might provide clues about Bitcoin’s subsequent transfer.
To merchants, FOMC means volatility
Merchants are carefully monitoring the FOMC minutes for any shifts within the Fed’s stance on inflation and rates of interest.
After the FOMC announcement, Bitcoin price tends to react sharply. For the reason that starting of 2024, BTC costs largely declined after the FOMC determined to take care of charges, as can be seen on the chart under.
The notable exception was the pre-halving rally of February 2024, which additionally coincided with the launch of the primary spot BTC ETFs. When US rates of interest have been lower on September, 18, 2024 and November 7, 2024, Bitcoin rallied.
Nevertheless, the third lower on December 18, 2024, didn’t yield the identical end result. The modest lower by 25 foundation factors to the 4.50%–4.75% vary marked the native Bitcoin price prime at $108,000.
BTC/USD 1-day chart with FOMC dates. Souce: Marie Poteriaieva, TradingView
Markets deleverage earlier than FOMC, besides this time
A key indicator that gives perception into market sentiment is Bitcoin open curiosity—the overall variety of spinoff contracts, largely $1 perpetual futures, that haven’t been settled.
Traditionally, Bitcoin open curiosity falls earlier than FOMC conferences, displaying that merchants are decreasing leverage and threat publicity, as per the graph primarily based on CoinGlass knowledge.
Bitcoin futures open curiosity and FOMC dates. Supply: Marie Poteriaieva, CoinGlass
Nevertheless, this month one other sample has emerged. Regardless of Bitcoin’s $12 billion open interest shakeout earlier this month, within the days previous the FOMC there was no noticeable lower in Bitcoin’s open curiosity. BTC price, nevertheless, declined, which is uncommon and will point out a powerful directional guess.
This might additionally be an indication that merchants really feel much less nervousness concerning the Fed’s determination, probably anticipating a impartial final result. Supporting this view, CME Group’s FedWatch device signifies a 99% chance that the Fed will keep charges at 4.25%–4.50%.
If the charges stay unchanged, it’s doable that Bitcoin price will proceed its present downtrend. This will likely be precisely what the HyperLiquid whale hoped for when it opened a 40x leveraged short position value over $500 million at its peak. Nevertheless, this place is now closed.
Associated: Bitcoin stalls under $85K— Key BTC price levels to watch ahead of FOMC
How are the spot Bitcoin ETFs reacting?
In contrast to Bitcoin whales, buyers within the spot Bitcoin ETFs have traditionally offloaded BTC holdings earlier than FOMC conferences.
For the reason that spot BTC ETFs launched in January 2024, most FOMC occasions have coincided with ETF outflows or, at finest, modest inflows, in keeping with CoinGlass knowledge. The notable exception was the earlier all-time excessive of January 2025, when even the spot Bitcoin ETF buyers couldn’t resist the urge to purchase.
Bitcoin spot ETF web inflows and FOMC dates. Supply: Marie Poteriaieva, CoinGlass
On March 17, the spot Bitcoin ETFs noticed $275 million in web inflows, marking a shift from a month of outflows. This will likely sign a shift in investor sentiment and expectations relating to the Fed’s coverage choices.
If spot ETF inflows are rising earlier than the FOMC, buyers may be anticipating a extra dovish stance from the Fed, akin to signaling future fee cuts or sustaining liquidity-friendly insurance policies.
Buyers might additionally be loading up on Bitcoin as a hedge in opposition to uncertainty. This implies that some institutional buyers imagine Bitcoin will carry out properly whatever the Fed’s determination.
Buyers might additionally be anticipating a doable brief squeeze. If merchants have been anticipating Bitcoin to drop and positioned brief, a sudden improve in ETF inflows might play a job in merchants’ behaviors and set off a brief squeeze.
Following the FOMC, BTC’s price motion, together with onchain knowledge and spot ETF flows will present whether or not the latest exercise was a part of a long-term accumulation pattern or simply speculative positioning.
Nevertheless, one factor that many merchants agree on now’s that BTC might expertise a big price motion after the FOMC announcement. As crypto dealer Grasp of Crypto put it in a latest X post:
“The FOMC is tomorrow, and a Huge Transfer is anticipated.”
Even with out fee cuts, the possibility of the Fed issuing dovish statements might raise markets, whereas the absence of them might drive costs decrease.
This text doesn’t include funding recommendation or suggestions. Each funding and buying and selling transfer includes threat, and readers ought to conduct their very own analysis when making a call.
