Bitcoin Price Volatility: FOMC Days and Market Reactions | 2025
Bitcoin Price Volatility: FOMC Days and Market Reactions
Bitcoin traders often reduce their risk exposure leading up to Federal Open Market Committee (FOMC) meetings, but recent price metrics suggest a divergence from this trend. As the market anticipates the release of the Fed minutes, the question arises: will Bitcoin (BTC) rally this time?
Current Market Overview
At the beginning of the week, Bitcoin’s price faced downward pressure from sellers, dropping from $84,500 on March 17 to $81,300 at the time of this writing. This decline is likely attributed to a sell-off related to the FOMC’s two-day meeting scheduled for March 18-19. Historically, FOMC meetings serve as market resets, causing crypto markets to brace for potential impacts.
Impact of FOMC Meetings on Bitcoin
Each time the FOMC convenes to discuss US monetary policy, traders typically de-risk and reduce leverage ahead of the announcement. Following the meeting and the press conference led by Federal Reserve Chair Jerome Powell, the markets often react sharply. The press release from the current FOMC meeting, set for Wednesday, March 19, at 2:30 PM ET, could trigger significant movements in the Bitcoin market.
Analyzing Market Behavior
Examining market behavior leading up to the FOMC announcement can provide valuable insights into Bitcoin’s potential next move. Historically, Bitcoin’s price tends to react sharply after FOMC announcements. Since the start of 2024, BTC prices have generally declined following FOMC decisions to maintain interest rates, as illustrated in the accompanying chart.
Notable Exceptions in Bitcoin Price Trends
One notable exception occurred during the pre-halving rally in February 2024, which coincided with the launch of the first spot Bitcoin ETFs. When the Federal Reserve cut interest rates on September 18, 2024, and November 7, 2024, Bitcoin experienced a rally. However, the third cut on December 18, 2024, did not yield the same positive outcome. The modest decrease of 25 basis points to the 4.50%–4.75% range marked a local Bitcoin price peak at $108,000.
Understanding Bitcoin Open Interest
A key indicator that sheds light on market sentiment is Bitcoin open interest, which represents the total number of derivative contracts, primarily $1 perpetual futures, that remain unsettled. Historically, Bitcoin open interest tends to decline before FOMC meetings, indicating that traders are reducing leverage and risk exposure. This trend is supported by data from CoinGlass.
Emerging Patterns in Open Interest
However, this month has revealed a different pattern. Despite Bitcoin’s earlier price decline, there has been no significant decrease in Bitcoin’s open interest in the days leading up to the FOMC meeting. This unusual behavior could suggest a strong directional bet among traders, indicating a potential shift in sentiment. It may also imply that traders are feeling less anxious about the Fed’s decision, possibly anticipating a neutral outcome.
Market Predictions and Expectations
Supporting this perspective, CME Group’s tool indicates a 99% probability that the Fed will maintain interest rates at 4.25%–4.50%. If rates remain unchanged, Bitcoin’s price may continue its current downtrend. This scenario might align with the expectations of the HyperLiquid whale, which opened a position worth over $500 million at its peak, although this position has since been closed.
Spot Bitcoin ETFs and FOMC Events
Since the launch of spot Bitcoin ETFs in January 2024, most FOMC events have coincided with ETF outflows or, at best, modest inflows, according to CoinGlass data. The notable exception was the previous all-time high in January 2025, when even spot Bitcoin ETF investors could not escape the volatility.
Conclusion: What Lies Ahead for Bitcoin?
As we approach the FOMC meeting, traders and investors alike are keenly observing Bitcoin’s price movements and market sentiment. The interplay between interest rate decisions and Bitcoin’s price behavior will be crucial in determining the cryptocurrency’s trajectory in the coming days. Will Bitcoin rally post-FOMC, or will it continue to face downward pressure? Only time will tell, but the current indicators suggest a complex landscape ahead.
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