Bitcoin Price Braces for FOMC Changes as History Shows Big Post-Fed Selloff
The price of Bitcoin is under increasing pressure ahead of Wednesday’s meeting of the Federal Open Market Committee (FOMC), which has historically been associated with large price movements in the largest cryptocurrency market.
Rate Cut Odds Dim
The Federal Reserve (Fed) is widely expected to leave interest rates unchanged at this meeting. Economists surveyed by financial data provider FactSet wait The federal funds rate – the benchmark rate banks use for overnight lending – will remain at 3.5% to 3.75%.
Such a suspension would follow three consecutive rate cuts by the Fed late last year, a change that initially fueled optimism across risk assets, including the price of Bitcoin.
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Despite that early momentum, Bitcoin’s value has struggled to keep its footing. Before the FOMC decision, the cryptocurrency is trading near $87,780, about 30% lower all time high reached last year.
Market analyst Ali Martinez pointed to Bitcoin’s historical behavior around FOMC meetings as a reason for caution. The latest posted on X (ex-Twitter) Martinez emphasized that expectations for a January rate cut are very low, at just 2.8%, indicating that meaningful policy cuts are unlikely in the near term.
That background, he says, tends to set the stage for Bitcoin price volatility rather than upside. Looking back to 2025, Martinez noted that Bitcoin reacted negatively after several Fed policy meetings.
Of the eight FOMC decisions held during the year, seven were followed by a significant drop in the price of Bitcoin. The January session was followed by a 27% drop, March down 14%, June down 8%, July down 6%, September down 7%, October down 29% and December finally losing 9%.
Analysts noted that the exception seen in the year came in May, when the price of Bitcoin briefly rallied by 15% after the decision.
Bitcoin Price Approaches Critical Decision Point
From a technical and on-chain perspective, the BitBull analyst also sees the price of Bitcoin approaching a critical period. BitBull noted on social media that the property entered what he described as a key decision point for the series.
At current levels, the price of Bitcoin is trading almost exactly at the Active Investor Mean, which is around $87,500. This level represents the average cost base for emerging buyers, which puts most of that money at breakeven.
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BitBull explained that pressure is building on both sides of the price. Above current levels, the cost base for a first-time owner sits near $96,500, meaning many recent buyers are already underwater.
As a result, any move higher to that area may face selling pressure as traders look to exit from reduced losses. On the other hand, the True Market Mean around $80,700 has historically marked the boundary between “normal maintenance and deep structural weakness.”
Further below, the price found near $56,000 suggests that long-term holders remain firmly in profit and unmoved by recent volatility.
BitBull says that if the price of Bitcoin can maintain support above the $87,500 level, it would indicate that the active capital is protecting its position and that the broader market forces remain strong. A sustained break below that level, however, could open the door to a move to $80,700.
Featured image from OpenArt, chart from TradingView.com
