At the start of the week, Bitcoin (BTC) price succumbed to pressure from sellers, declining from $84,500 on March 17, to $81,300 at the time of writing. This downward movement was most likely a sell-off related to the Federal Open Market Committee’s (FOMC) two-day meeting, which takes place on March 18-19.
Federal Open Market Committee (FOMC) meetings tend to act as market resets. Each time the FOMC meets to deliberate on US monetary policy, crypto markets brace for impact.
Historically, traders de-risk and reduce leverage ahead of the announcement, and after the meeting and press conference from Federal Reserve Chair Jerome Powell the markets can be equally reactive.
The press release of the current FOMC meeting scheduled for Wednesday, March 19, at 2:30 pm ET, and it could trigger major movements in the Bitcoin market. Analyzing market behavior leading to its release could offer clues about Bitcoin’s next move.
To traders, FOMC means volatility
Traders are closely monitoring the FOMC minutes for any shifts in the Fed’s stance on inflation and interest rates.
After the FOMC announcement, Bitcoin price tends to react sharply. Since the beginning of 2024, BTC prices mostly declined after the FOMC decided to maintain rates, as can be seen on the chart below.
The notable exception was the pre-halving rally of February 2024, which also coincided with the launch of the first spot BTC ETFs. When US interest rates were cut on September, 18, 2024 and November 7, 2024, Bitcoin rallied.
However, the third cut on December 18, 2024, did not yield the same result. The modest decrease by 25 basis points to the 4.50%–4.75% range marked the local Bitcoin price top at $108,000.
BTC/USD 1-day chart with FOMC dates. Souce: Marie Poteriaieva, TradingView
Markets deleverage before FOMC, except this time
A key indicator that provides insight into market sentiment is Bitcoin open interest—the total number of derivative contracts, mostly $1 perpetual futures, that have not been settled.
Historically, Bitcoin open interest falls before FOMC meetings, showing that traders are reducing leverage and risk exposure, as per the…
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