Bitcoin faces growing pressure ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting, an event that has often triggered significant moves for the leading cryptocurrency.
The Federal Reserve is widely expected to hold interest rates steady, keeping the benchmark federal funds rate between 3.5% and 3.75%. This pause follows three consecutive rate cuts late last year, which initially boosted risk assets like Bitcoin.
Despite that earlier momentum, Bitcoin has struggled to hold its gains. It is currently trading near $87,780, roughly 30% below last year’s all-time highs.
Market analyst Ali Martinez points to Bitcoin’s historical performance around FOMC meetings as a cause for caution. He notes that expectations for a January rate cut are extremely low, at just 2.8%, suggesting no major policy easing is imminent. This environment, he argues, has typically led to increased Bitcoin volatility rather than sustained rallies.
Looking at 2025, Martinez observed that Bitcoin fell after seven of the year’s eight FOMC meetings. The only exception was in May, when the price briefly rallied about 15%.
From a technical standpoint, analyst BitBull sees Bitcoin approaching a critical juncture. The price is trading near the Active Investor Mean of around $87,500, which represents the average cost basis for active buyers. This puts much of that capital at breakeven, creating pressure.
Above the current price, the short-term holder cost basis near $96,500 means many recent buyers are underwater, potentially creating selling pressure on any rally. Below, the True Market Mean near $80,700 has historically separated routine corrections from deeper weakness. Further down, the realized price near $56,000 indicates long-term holders remain in profit and largely unfazed.
BitBull argues that holding above $87,500 would signal active capital is defending its position and broader market strength remains. A sustained break below, however, could open the door for a move toward $80,700.
Frequently Asked Questions
FAQs Bitcoin Price Potential Volatility Around the FOMC Decision
BeginnerLevel Questions
1 What is the FOMC and why does it matter for Bitcoin
The FOMC is the branch of the US Federal Reserve that sets key interest rates Their decisions influence the entire financial system When they raise rates it often makes risky assets like Bitcoin less attractive compared to safer yieldbearing investments which can lead to price drops
2 What does volatility mean in this context
Volatility refers to how much and how quickly the price of Bitcoin is likely to move up or down The period around the FOMC announcement is often marked by sharp unpredictable price swings as traders react to the news
3 Im new to crypto Should I be worried about this news
Its a reminder to be cautious Major economic events like FOMC meetings can trigger significant market moves If youre investing its wise to understand that shortterm price swings are common and to avoid making impulsive decisions based on headlines
4 What is a postFed decline
Its a historical pattern where Bitcoins price has often decreased in the hours or days immediately following an FOMC meeting or interest rate announcement though this is not a guaranteed outcome every time
Intermediate Advanced Questions
5 How exactly do higher interest rates negatively affect Bitcoin
Higher rates increase borrowing costs slow economic activity and strengthen the US dollar This creates a tightening financial environment where investors typically reduce exposure to speculative highgrowth assets like cryptocurrencies in favor of stability and yield
6 Is the potential decline only about interest rates
Not solely The Feds statement and the press conference by the Chair are equally important The market reacts to the tonehints about future policy and views on inflation can have a bigger impact than the rate decision itself
7 Does Bitcoin always go down after FOMC meetings
No its a historical tendency not a rule The price reaction depends on whether the decision was already priced in by the market or if there is a surprise Sometimes if the news is less hawkish than feared prices can rally on relief