Bitcoin heads into the March Federal Open Market Committee (FOMC) meeting with strong momentum, trading above $74,000 after eight consecutive daily gains. However, data compiled by bitcoin lender Two Prime suggests that this strength may mask a recurring pattern: FOMC meetings have historically acted as short-term bearish catalysts for BTC.
Looking ahead to 2025, bitcoin posted negative returns in the 48 hours following seven of the eight FOMC meetings. Even in May, when BTC rallied sharply, the broader trend points to continued weakness post-meeting, regardless of whether the Fed held rates or changed policy direction. This reinforces the idea that the event itself, rather than the outcome, drives volatility.
The upcoming decision is unlikely to bring any surprises. Markets are pricing in a near certainty, around 99%, that the Federal Reserve will keep rates steady in the 350 to 375 basis point range. Meanwhile, the futures market is only pricing in a single 25 basis point rate cut by the end of the year, reinforcing a long-term bullish backdrop. Even with a new Federal Reserve Chairman, Kevin Warsh, expected to take office in June.
Macroeconomic risks further complicate the picture. The escalating conflict in the Middle East and oil prices hovering around $100 a barrel are likely to put upward pressure on CPI inflation figures, limiting the Federal Reserve’s flexibility to ease policy in addition to a weakened labor market.
With Bitcoin entering the meeting in a buoyant state, the risk shifts towards a classic selling news reaction.
