As the new week commenced, Bitcoin (BTC) was under significant selling pressure, leading to a decline in its price from $84,500 on March 17 to approximately $81,300 at the time of this analysis. This downward trajectory appears largely influenced by a sell-off linked to the Federal Open Market Committee’s (FOMC) two-day meeting, which is scheduled for March 18-19.
FOMC meetings often serve as pivotal points for market dynamics, particularly within the cryptocurrency sphere. Traders are typically on high alert as the committee deliberates on U.S. monetary policy. In anticipation of these meetings, it is common for traders to de-risk and lower their leverage positions, as evidenced by historical trading patterns. Furthermore, the outcomes and subsequent remarks from Federal Reserve Chair Jerome Powell can prompt immediate and volatile responses from the markets.
The forthcoming press release from the FOMC meeting, anticipated on March 19 at 2:30 PM ET, holds the potential to trigger significant movements within the Bitcoin market. Observing market trends in the days leading up to this announcement could offer critical insights into Bitcoin’s short-term trajectory.
**FOMC Meetings: A Catalyst for Volatility**
Traders are keenly watching for any indications of changes in the Federal Reserve’s approach to inflation and interest rates in the FOMC minutes. In the aftermath of prior FOMC announcements, Bitcoin’s price has exhibited pronounced reactions—typically in a downward direction. An analysis of price charts since the beginning of 2024 indicates that, following decisions to maintain interest rates, Bitcoin tended to experience a decline, with few exceptions.
One notable deviation occurred during the pre-halving rally in February 2024, coinciding with the launch of the first spot Bitcoin ETFs. Conversely, substantial Bitcoin rallies were seen following interest rate cuts on September 18 and November 7 of the same year. However, a subsequent rate reduction on December 18 did not have a similarly positive effect—this cut of 25 basis points to the 4.50%–4.75% range coincided with Bitcoin reaching a local price peak of $108,000.
**Emerging Patterns in Open Interest**
An important metric for gauging market sentiment is Bitcoin open interest, which represents the total number of outstanding derivative contracts that have yet to be settled, particularly within the realm of perpetual futures. Traditionally, Bitcoin open interest tends to dip ahead of FOMC meetings, suggesting a reduction in traders’ leverage and risk exposure. However, an atypical scenario has emerged this month: despite earlier volatility resulting in a dramatic $12 billion shakeout in open interest, the days leading up to the FOMC yielded no significant decrease in Bitcoin’s open interest even amidst a price decline.
This unusual behavior may indicate that traders currently exhibit less apprehension regarding the Fed’s decisions, perhaps expecting a neutral outcome. Supporting this sentiment is the CME Group’s FedWatch tool, which points to a near-certain probability—99%—that interest rates will remain steady at 4.25%–4.50%. If the FOMC opts to maintain rates, the possibility remains that Bitcoin could continue its current downtrend, which aligns with the strategic positioning of some traders. Notably, a significant whale was recorded opening a 40x leveraged short position exceeding $500 million ahead of the FOMC meeting, although this position has since closed.
**Spot Bitcoin ETFs: A Diverging Trend**
In stark contrast to whale behavior, investors in spot Bitcoin ETFs typically divest their BTC holdings leading up to FOMC meetings. Since the launch of spot Bitcoin ETFs in January 2024, most FOMC events have been accompanied by outflows from these funds, with the exception of notable purchasing activity during the all-time high mark in January 2025.
Interestingly, March 17 marked a turning point, with spot Bitcoin ETFs experiencing $275 million in net inflows—an indication of a shift from a prior trend of outflows. This change may reflect evolving investor sentiment and expectations surrounding the Federal Reserve’s monetary policy trajectory. Rising inflows ahead of the FOMC suggest a potential anticipation among investors of a more dovish stance from the Fed, possible rate cuts, or an ongoing commitment to liquidity-enhancing policies.
Some institutional investors may view these inflows as a hedge against uncertainty, underpinning a belief that Bitcoin can maintain resilience regardless of the Fed’s actions. Additionally, there is a possibility of a short squeeze in play; if traders had anticipated a price drop and positioned themselves accordingly, surging ETF inflows could disrupt their strategies and trigger a short-covering rally.
In the aftermath of the FOMC meeting, monitoring Bitcoin’s price movements alongside on-chain data and ETF flows will be vital to ascertain whether recent fluctuations represent a long-term accumulation trend or merely speculative positioning.
**Concluding Thoughts**
Professional consensus suggests that Bitcoin may witness pronounced price movements following the conclusion of the FOMC meeting. Commentary from prominent market figures echoes this expectation, emphasizing the anticipation of a significant shift in price dynamics.
Even in the absence of rate cuts, the Fed’s communication could play a crucial role in market reactions, as dovish statements may buoy market sentiment while a lack of direction could lead to declines.
As always, it is essential for investors to exercise caution. This article does not serve as investment advice, and individuals are encouraged to conduct thorough research and consider their risk tolerances when making financial decisions in this volatile landscape.