How FOMC Decisions Impact Bitcoin and the Crypto Market (What Traders Need to Know)
The crypto market is sitting at a crossroads — and today’s FOMC meeting could decide which way it moves next.
Bitcoin is currently trading between $71K and $99K, stuck in what traders call "no man’s land." Open interest is low, trading volume is down, and the fear and greed index is sitting at 32 — signaling hesitation and uncertainty. The market is waiting for a push, and that push could come from the Fed’s next move.
Let’s break down exactly what’s happening and what it could mean for the crypto market:
Why the FOMC Meeting Matters for Crypto
The Federal Open Market Committee (FOMC) is the policy-making arm of the U.S. Federal Reserve. It meets about eight times a year to decide on key aspects of U.S. monetary policy — specifically interest rates and liquidity levels.
Why does that matter for crypto?
When the Fed raises interest rates or reduces liquidity (known as quantitative tightening), it makes borrowing more expensive and pulls cash out of the system. That reduces investor appetite for high-risk assets like crypto, tech stocks, and growth investments.
On the other hand, if the Fed lowers rates or pumps liquidity into the system (quantitative easing), money becomes cheaper and more available. Investors tend to pile into higher-risk assets — which is why Bitcoin has historically thrived during loose monetary policy periods.
For example:
In 2020, when the Fed cut rates and started quantitative easing in response to COVID-19, Bitcoin surged from around $6K to over $60K in just 18 months.
Conversely, when the Fed began raising rates in late 2021, Bitcoin dropped from its all-time high of $69K to under $20K by the end of 2022.
Today’s FOMC meeting could spark a similar shift — in either direction.
Current Market Setup
Here’s what’s happening under the surface of the crypto market:
Low Open Interest
Open interest refers to the total number of outstanding futures and options contracts. Right now, it’s sitting at multi-month lows — which means fewer traders are making big bets. This is typical ahead of major macro events like FOMC meetings.
When open interest is low, markets become easier to move because there’s less liquidity backing each trade. That means a single large order — or an unexpected Fed announcement — could cause a sharp price swing.
Falling Volume
Exchange volume has been in a downtrend since mid-November. This signals that fewer people are actively trading, which lowers overall liquidity and makes the market more susceptible to manipulation and sudden price moves.
Low volume environments tend to create more volatility because it takes less money to move the market.
Neutral RSI (Relative Strength Index)
The RSI is sitting at a neutral level — neither overbought nor oversold. This reflects the current indecision among traders. Bitcoin could just as easily break upward or downward depending on the Fed’s tone.
Bitcoin's Path from Here
Bitcoin is currently bouncing between $71K and $99K — two key levels that traders are closely watching.
If Bitcoin breaks above $99K, it could signal the final leg of the current bull run, potentially pushing toward $120K or higher.
If it drops below $71K, it would likely confirm the start of a bear market — potentially dropping back toward $60K or lower.
One key indicator to watch is the 50-day and 200-day moving average:
When the 50-day crosses above the 200-day ("golden cross"), it’s typically a bullish signal.
When the 50-day drops below the 200-day ("death cross"), it’s a bearish signal.
Right now, the 50-day is starting to slope downward — a potential warning sign that a bearish trend is developing.
How Smart Money is Positioning
Experienced traders are already preparing for both outcomes:
Shorting the market — Some traders are setting up shorts around $71K in case the Fed signals tightening.
Longing the breakout — Others are waiting for Bitcoin to show strength and reclaim key levels before going long.
Holding in Stablecoins — Conservative investors are moving into stablecoins to reduce exposure to market swings until there’s more clarity.
In times of uncertainty, diversification is key. That’s why many traders are combining long-term Bitcoin and Ethereum holdings with cash flow strategies in decentralized finance (DeFi) — earning fees and passive income while the market sorts itself out.
DeFi allows traders to provide liquidity, stake tokens, and earn rewards — essentially "selling shovels during the gold rush" rather than digging for gold.
Why It's Not Too Late to Get Into Bitcoin
Some people believe they’ve missed the boat on Bitcoin — but that’s not true.
Bitcoin has followed a logarithmic regression curve since 2011 — and if that pattern holds, Bitcoin could realistically hit $1 million by 2028 to 2030.
Mass adoption is also accelerating:
Major institutions like BlackRock and Fidelity have entered the crypto space.
Brick-and-mortar businesses are offering crypto incentives and accepting Bitcoin payments.
In places like Amsterdam, physical crypto storefronts are offering USDT bonuses for signing up — a sign that mainstream adoption is growing fast.
This is still the early stage of crypto — the next five years could be the most lucrative window.
This is for informational purposes only and is not financial advice. Always do your own research and consult a professional before making any trading decisions.
For an in-depth look at these possibilities and to stay connected with cryptocurrency, join my mailing list at crypto.lifestyle.
Here's to a future where digital freedom meets meaningful change.
