Bitcoin Braces For FOMC Interest Rate Decision: Is A Hawkish Surprise Coming?

Bitcoin (CRYPTO: BTC) remains range-bound around $88,000, but traders are bracing for potential volatility and downside risk.

Bitcoin And FOMC: A Complicated Story

Historically, Bitcoin has reacted negatively around FOMC meetings with around 9% drop the last time.

Crypto chart analyst Ali Martinez noted that in 2025, BTC fell after seven of eight Fed decisions.

A 15% spike in May 2025 was the exception.

With January 2026 rate-cut odds extremely low (~2.8%), policy easing appears unlikely, keeping downside risks elevated.

FOMC weeks have consistently delivered higher volatility and post-announcement weakness, making caution essential.

First FOMC Of 2026: What Traders Are Watching

Trader Andrew Crypto noted that on lower timeframes, a liquidity sweeps into the FOMC around $85,000 followed by a bounce towards around $92,000 would not be surprising.

The closest heavy liquidity sits below price, roughly $84,800?$86,800 and remains untapped.

While upside liquidity exists, it is much farther away, making downside the more immediate draw from a liquidity perspective.

Trader Niels emphasized that markets will react less to the rate decision itself and more to the Fed's tone. The key question is whether the Fed signals a March rate cut.

Current odds of a 25 basis points cut remain extremely low at around 3%.

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