The price of BTC broke through $94,000 on Tuesday, just a day before the Federal Open Market Committee (FOMC) interest rate decision, with historical data indicating that investors should be well-prepared for market volatility.
Looking ahead to 2025, BTC's performance around FOMC meetings reveals that the market typically anticipates macroeconomic expectations in advance, and this "front-running" behavior by traders often obscures the actual impact of the policy decisions themselves.
Key points:
Historical data shows that BTC experiences sell-offs after most FOMC events, even during rate-cutting cycles.
BTC usually sees the largest inflows of capital and leverage accumulation before FOMC events, which leads to reduced spot liquidity and amplifies price volatility after the Federal Reserve's decision is announced.
BTC's response to the seven FOMC decisions in 2025 reveals a unique pattern: first, there is expected pricing, followed by inconsistent and often negative post-meeting trends. Here are the specific performances of BTC in the seven-day window following each meeting:
January 29 — Interest rate unchanged: -4.58%
March 19 — Interest rate unchanged: +5.11%
May 7 — Interest rate unchanged: +6.92%
June 18 — Interest rate unchanged: +1.48%
July 30 — Interest rate unchanged: -3.15%
September 17 — Rate cut of 25 basis points: -6.90%
October 29 — Rate cut of 25 basis points: -8.00%
The seven-day return range for BTC after each meeting fluctuated from +6.9% to -8%, notably, the rate cut meetings resulted in the weakest market performance. This discrepancy is more apparent when viewed from the perspective of market structure rather than macroeconomic headlines. The analysis points to a series of consistent structural factors driving BTC's reactions:
- Market positioning determines outcomes:
Before multiple meetings, especially in July, September, and October, funding rates and open interest surged significantly, indicating that the market was over-leveraged. As shown in the charts, new capital (from one day to one month) realized profits peaked in May, July, and September, which also marked recent highs for BTC.
Most of the "dovish rallies" had already been priced in, leading to limited marginal buying power for BTC at the time of the FOMC announcement.
- Rate cuts produced the largest declines:
After the 25 basis point cuts in September and October, the seven-day declines were -6.9% and -8%, respectively. Professional analysis indicates that the easing cycle had already been priced in through capital inflows and aggressive long positions before the FOMC meetings, creating market fragility rather than support when the rate cuts were officially implemented.
- Price movements priced in early indicate fragility rather than stability:
When policy outcomes are nearly certain, volatility is compressed before the meeting and immediately expands afterward, as traders reduce exposure based on confirmed news, causing predictable short-term market dislocations. Crypto analyst Ardi points out:
Overall, the data suggests that FOMC events act more like market reset points rather than directional catalysts. At these junctures, over-leveraged positions may be unwound, even if the interest rate decision itself leans dovish.
Related: Bitcoin (BTC) aiming for $100,000 by year-end largely depends on the outcome of the Federal Reserve's policy shift.
Original article: “Short the dip and buy the rip? What FOMC outcomes reveal about Bitcoin (BTC) price action”
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