Bitcoin (BTC) extended its two-day decline on Wednesday after the Federal Open Market Committee (FOMC) minutes confirmed the Fed’s decision to hold “the target range for the federal funds rate at 3-½ to 3-¾ percent.”
While the Fed maintains its goal of achieving “maximum employment and inflation at the rate of 2 percent over the longer run,” the FOMC minutes cited the “developments in the Middle East” as factors fueling an environment of “uncertainty” and the Fed stressed its desire to maintain optionality as it evaluates the “risks to both sides of its dual mandate.”
The Fed’s hold on rates aligned with market expectations, but Bitcoin remained fragile throughout Chairman Powell’s presser.
Hyblock CEO Shubh Varma described the price action as “the usual sell the news reaction after the FOMC,” but also noted that BTC “quickly recovered to pre-announcement levels within hours, showing strong underlying conviction.”
Adding data to back his market view, Varma said,
“The global bid ask ratio spiked to 0.3 (one of the highest readings), while open interest fell on the price drop. This is classic post-FOMC position squaring and stop-hunt behavior rather than conviction selling.”
BTC/USDT global bid ask ratio. Source: Hyblock
BTC dropped to an intra-day low of $74,937, slightly below the 20-day simple moving average ($75,664) that some traders identified as critical to confirming BTC’s support-resistance flip.
As reported on Monday by Cointelegraph, after breaking above the channel resistance on the daily chart, BTC required consecutive daily candle closes above the trendline, followed by a lower support restest in the $76,500 to $75,500 range.
BTC/USDT 1-day chart. Source: TradingView
While all the above have happened, failure to recapture the 20-MA and close above the trendline resistance could be interpreted as a loss of momentum within the bull trend, opening the path for Bitcoin to test the downside boundary of the near-4-month-old channel.
Related: Bitcoin falls as traders cut risk ahead of FOMC: Will Tradfi, spot ETF volumes bolster $70K support?
Prior to the Chairman Powell’s presser, Glassnode analysts noticed that Bitcoin traders were adding bearish leverage, citing rising open interest after Tuesday’s rally to $79,000, funding remaining neutral and a divergence between the spot and futures market cumulative volume delta (CVD).
Bitcoin traders turn bearish ahead of FOMC minutes. Source: Glassnode / X
Additional analysis from Glassnode’s The Week Onchain report depicted Bitcoin’s price action as “trapped below market mean,” where $65,000 to $70,000 act as support, but weak demand prevents the formation of sustainable rallies.
According to the report, Bitcoin failed to overcome its True Market Mean at $79,000 and a surge in short-term holders’ profit taking, along with margin futures flipping net short, has sapped away Bitcoin’s shorter-term bullish momentum.
BTC entity-adjusted short-term holder realized profit. Source: Glassnode
While these factors increase Bitcoin’s sensitivity to a sharper downside move, the analysts said institutional flows into the spot BTC ETFs and rising CME open interest have helped to build a “dense accumulation cluster between $65K and $70K.”
CME open interest, US spot ETF AUM position change. Source: Glassnode