Bitcoin traders often reduce risk ahead of Federal Open Market Committee (FOMC) meetings, but key price indicators show conflicting signals. Will Bitcoin prices rise when the Fed releases its meeting minutes?
Market Reactions to FOMC Announcements
This week, Bitcoin (BTC) prices succumbed to selling pressure, dropping from $84,500** on March 17 to **$81,300 at the time of writing. This decline likely reflects pre-FOMC selling behavior ahead of the two-day meeting on March 18–19.
Historically, FOMC meetings act as market resets. Traders typically:
- Reduce leverage before announcements.
- React strongly to Fed statements and press conferences.
👉 Why FOMC decisions impact crypto markets
The Fed’s statement, scheduled for 2:30 PM ET on March 19, may trigger significant Bitcoin volatility. Analyzing pre-release trends could hint at BTC’s next move.
FOMC Volatility: A Closer Look
Since 2024, Bitcoin prices have mostly declined after FOMC meetings, except during the February halving rally coinciding with spot ETF launches. Key observations:
- Rate cuts in September/November 2024: BTC rose.
- December 2024 cut (25 bps): BTC peaked at $108,000 before retreating.
Leverage Trends Pre-FOMC
Bitcoin’s open interest (OI) — total unsettled derivatives contracts — usually drops before FOMC meetings as traders deleverage. However, March 2025 shows an anomaly:
- OI remained stable despite a recent $12B liquidation event.
- Price declines suggest strong directional bets or neutral Fed expectations.
CME’s FedWatch Tool indicates a 99% probability rates stay at 4.25%–4.50%. If unchanged, BTC may extend its downtrend.
Spot ETF Flows: A Contrarian Signal?
Unlike whales, Bitcoin spot ETF investors historically sell before FOMC meetings. Since January 2024:
- Most FOMC events saw ETF outflows or minimal inflows.
- Exception: January 2025’s rally attracted ETF inflows.
Recent data shows a shift:
- March 17: $275M net inflows after a month of outflows.
Possible reasons:
- Powell’s dovish hints (e.g., future rate cuts).
- Hedging against uncertainty.
👉 How ETFs influence Bitcoin’s price action
FAQs: FOMC and Bitcoin
1. Why does Bitcoin react to FOMC decisions?
FOMC policies impact liquidity and risk appetite. Rate changes affect USD strength, indirectly influencing BTC’s appeal as an alternative asset.
2. Do traders always deleverage before FOMC?
Typically, yes. Stable OI in March 2025 suggests traders may expect neutral outcomes or position for volatility.
3. How do spot ETFs respond to Fed meetings?
Mostly with outflows, but recent inflows indicate shifting sentiment—possibly anticipating bullish catalysts.
4. Could a “short squeeze” occur post-FOMC?
Yes. If ETF inflows surge unexpectedly, leveraged shorts may cover positions, driving prices higher.
5. What’s the worst-case scenario for BTC?
A hawkish Fed (no rate cuts + inflation concerns) could prolong BTC’s correction.
Key Takeaways:
- Watch OI and ETF flows for sentiment clues.
- Neutral Fed stance may extend BTC’s range-bound trading.
- Dovish signals could reignite bullish momentum.
Disclaimer: This content is for educational purposes only. Always conduct independent research before investing.