In the grand cosmic dance of the digital universe, Bitcoin (BTC) took a little stumble at the beginning of this haphazard week. From the giddy heights of $84,500 on March 17, it tumbled down to $81,300 by the time your humble narrator got around to jotting this down. This little dive was likely due to the Federal Open Market Committee (FOMC) having one of their periodic chinwags about the state of the economy, which, let’s face it, is as predictable as a Vogon constructor fleet.
Oh, those FOMC meetings. They’re like the market’s annual trip to the dentist—nobody looks forward to it, but it’s got to be done. Crypto markets hold their breath, waiting to see if the Fed will yank their financial wisdom teeth.
Traders, in their infinite wisdom, often decide to play it safe and de-risk ahead of the big reveal. After all, Federal Reserve Chair Jerome Powell might as well be a magician when it comes to making billions vanish or appear out of thin air.
The eagerly anticipated press release from the FOMC is due on March 19 at the ungodly hour of 2:30 pm ET. Market analysts will be parsing every word, trying to predict Bitcoin’s next quantum leap or faceplant.
FOMC: Where Volatility Goes to Party 🎉
Traders keep a beady eye on the FOMC minutes, searching for any hint of a change in the Fed’s feelings about inflation and interest rates. It’s like trying to read the mind of a particularly moody cat.
Bitcoin’s price tends to do the crypto equivalent of a swan dive after the FOMC speaks its wisdom. Since the dawn of 2024, BTC has mostly taken a nosedive whenever the FOMC decided to keep rates steady, as the chart below will no doubt illustrate with its pretty lines and colors.
But wait! There was that one time when Bitcoin decided to party like it was 1999, just before the halving in February 2024. And who can forget the excitement of the first spot BTC ETFs? It was like crypto Christmas came early.
Then there were those rate cuts in September and November 2024. Bitcoin got its groove back and rallied. But the third cut in December? Meh. Bitcoin topped out at $108,000 and called it a day.
Markets Deleverage Before FOMC, But Not This Time 🤷♂️
Bitcoin open interest is like the barometer of trader jitters. Historically, it drops before FOMC meetings, a sure sign that traders are hitting the brakes on their risk-taking. But graphs don’t lie, and the data from CoinGlass tells an interesting tale.
This month, however, the usual pattern got a shake-up. Despite a $12 billion shakeout earlier, Bitcoin’s open interest didn’t budge in the lead-up to the FOMC. The price dropped, but the open interest stayed put. It’s like everyone’s waiting for Godot, but with more digital currency.
Could this be a sign that traders are cool as cucumbers about the Fed’s decision? Or are they just hoping for a “meh” outcome? The CME Group’s FedWatch tool is practically singing from the rooftops that there’s a 99% chance rates will stay put. So, what’s it gonna be?
If rates stay unchanged, Bitcoin might just keep on sliding down that slippery slope. And let’s not forget the HyperLiquid whale who took a 40x leveraged short position. Talk about going big or going home. But hey, that position is now closed, so no harm, no foul, right?
Spot Bitcoin ETFs: To Sell or Not to Sell? 🤔
Bitcoin whales might be playing it cool, but investors in spot Bitcoin ETFs usually get the jitters and sell before the FOMC meetings. It’s like clockwork, except for that one time in January 2025 when even the ETF crowd couldn’t resist the siren call of Bitcoin.
But lo and behold, on March 17, the spot Bitcoin ETFs saw a whopping $275 million in net inflows. It’s like the investors collectively said, “You know what? Let’s give this a shot.”
If ETF inflows are on the rise, it could mean investors are expecting a dovish Fed or maybe they’re just hedging their bets. Or maybe they’re hoping for a short squeeze. After all, who doesn’t love a good short squeeze?
Once the FOMC has had its say, we’ll see if this was a sign of things to come or just a blip on the radar. But one thing’s for sure, a “Big Move” is expected, as the mysterious crypto trader Master of Crypto so eloquently put it.
So, will the Fed pull a rabbit out of its hat, or will it be business as usual? Only time (and the FOMC) will tell.
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2025-03-18 22:52