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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