On Wednesday, Bitcoin (BTC) retraced its recent gains as traders anticipated potential fakeout moves surrounding the Federal Reserve’s interest rate announcement.
Key points:
Bitcoin struggled to maintain its earlier ascent above $94,500 amid heightened nerves regarding the Fed’s rate decision.
Traders are bracing for unpredictable price movements in either direction around the FOMC meeting.
Volatility in Japan-centered risk assets is on the horizon as the next significant consideration.
Bitcoin’s price swings overlook the annual opening
Data from Cointelegraph Markets Pro and TradingView indicated that BTC’s price trajectory was declining as Wall Street opened.
After reaching $94,650 the previous day, BTC/USD was unable to sustain higher levels, including the annual opening for 2025.
At the time of writing, the pair was trading close to $92,000, as market participants anticipated unreliable pricing actions ahead of the rates announcement and press conference.
“FOMC meetings can be quite tricky,” noted crypto trader, analyst, and entrepreneur Michaël van de Poppe on X.
“Price movements tend to trap everyone before the real shift, so even if Bitcoin dips to $91K, I won’t be overly concerned.”
Trader Daan Crypto Trades observed that there was a lack of significant liquidity clusters in exchange order books on either side of the price following the upward movement.
“$BTC removed the $93K-$94K liquidity cluster as mentioned yesterday. This was the logical area to target from a liquidity standpoint. With that cleared, there’s no considerable area nearby,” he informed his X followers, along with insights from monitoring resource CoinGlass.
“As the price consolidates, we’re seeing clusters forming around the $90K and $95K levels.”
As previously reported by Cointelegraph, markets anticipated a strong likelihood of the Federal Open Market Committee (FOMC) reducing rates by 0.25%. However, Fed Chair Jerome Powell’s outlook on future policy remained uncertain.
“The rate decision is almost fully priced in, but the real focus will be on Powell’s tone,” trading firm QCP Capital noted in its latest “Asia Color” market update.
“With little new data since the last meeting, the Fed is unlikely to pre-signal a January move, leaving traders to analyze every detail of the press conference.”
Japan revives familiar crypto risk
QCP further stated that post-FOMC reactions would shift risk-asset traders’ focus to Japan, noting unusual conditions in its bond market.
Related: Bitcoin retail inflows to Binance ‘collapse’ to 400 BTC record low in 2025
“The BOJ meeting on December 19 has emerged as the next significant risk event,” it added.
“JGB yields are at multi-decade highs, with the 10Y near 1.95%, its highest since 2007, and the 30Y around 3.39%, a record and more than 100bps above last year.”
Potential volatility could stem from bonds impacting the yen carry trade—a phenomenon already observed in 2024, where crypto markets responded in real-time.
Japan’s central bank has indicated a potential divergence from global trends, hinting at possible future interest rate hikes.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. While we strive to provide accurate and timely information, Cointelegraph does not guarantee the accuracy, completeness, or reliability of any information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph will not be liable for any loss or damage arising from your reliance on this information.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. While we strive to provide accurate and timely information, Cointelegraph does not guarantee the accuracy, completeness, or reliability of any information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph will not be liable for any loss or damage arising from your reliance on this information.
