Bitcoin Price Braces For FOMC Volatility As History Shows Major Post‑Fed Sell‑Offs

Overview

The Bitcoin price is facing heightened pressure as it approaches an upcoming Federal Open Market Committee (FOMC) meeting, a historical trigger for significant price fluctuations in the cryptocurrency. With expectations for the Federal Reserve to maintain interest rates, market participants are cautious about potential volatility.

Current Market Situation

The Federal Reserve is anticipated to keep interest rates steady during the forthcoming FOMC meeting. Economists have evaluated the federal funds rate, which serves as the benchmark for overnight lending among banks, to remain in the range of 3.5% to 3.75%. This decision follows three consecutive rate cuts made by the Fed late last year, which initially instigated a sense of optimism across various risk assets, including Bitcoin.

Despite the previous momentum, Bitcoin’s price has encountered difficulty in sustaining its value. Currently trading near $87,780, it is approximately 30% less than the all-time highs achieved the previous year. Market analyst Ali Martinez has underscored the historical patterns of Bitcoin’s performance around FOMC meetings, advising caution. He noted that the anticipation for a rate cut in January is very low, estimated at just 2.8%. This suggests that significant policy easing may not be forthcoming, which has historically led to increased volatility in Bitcoin rather than a sustained upward trend.

Reflecting on 2025, Martinez highlighted that Bitcoin typically reacted negatively following most of the Fed’s policy meetings. Out of eight FOMC decisions in that year, seven resulted in noteworthy declines in Bitcoin’s price. Specific declines included a 27% drop following the January meeting, a 14% decline in March, and various other decreases throughout the year, with the only exception being a brief 15% rally in May.

Technical Analysis

From a technical perspective, analyst BitBull has indicated that Bitcoin is nearing a crucial decision point. According to her analysis, the asset is currently trading near the Active Investor Mean, approximately $87,500. This level represents the average cost basis for active buyers, suggesting that much of the invested capital is at breakeven.

BitBull noted that pressure is mounting from both directions. Above the current price, the short-term holder cost basis is around $96,500, implying that many recent buyers may be facing losses. Consequently, any upward movement towards this level could encounter selling pressure as traders aim to minimize losses. Conversely, on the downside, the True Market Mean, estimated at around $80,700, has historically delineated the line between routine corrections and deeper structural weaknesses.

Further below this level, the realized price near $56,000 indicates that long-term holders remain profitable and largely unaffected by recent market volatility. BitBull argues that maintaining support above the $87,500 level would suggest active capital is defending its position, signaling broader market strength. However, a sustained drop below this level could potentially lead to a decline towards $80,700.

From author

As Bitcoin navigates this pivotal moment ahead of the FOMC meeting, the historical context and technical indicators suggest a precarious balance between potential support and resistance. The outcome of the FOMC meeting could play a crucial role in shaping the market’s trajectory in the near term.

Impact on the crypto market

• Bitcoin’s price is currently under pressure as it approaches a key decision point.
• Historical data shows a tendency for Bitcoin to react negatively following FOMC meetings, which may lead to increased market volatility.
• The current trading level is approximately 30% below last year’s all-time highs, indicating significant downward pressure.
• Active investors are at breakeven, suggesting that any movement above or below critical levels could trigger selling or buying pressure.
• The market is closely watching the FOMC meeting for indications of future monetary policy that could impact risk assets like Bitcoin.