Bitcoin (BTC) experienced a pullback on Wednesday, surrendering recent gains as traders anticipated potential fakeout moves surrounding the Federal Reserve's interest-rate announcement.
Key points indicate that Bitcoin failed to sustain its upward momentum past $94,500, with market nerves heightened by the Fed's interest-rate decision. Traders are bracing for unpredictable price movements in both directions during the FOMC meeting. Furthermore, volatility in Japan's risk assets is emerging as the next significant concern for the market.
Bitcoin Price Movements Deviate from Yearly Open
Data from Cointelegraph Markets Pro and TradingView revealed a downward trend in Bitcoin's price trajectory as the Wall Street trading session commenced.
Having reached a high of $94,650 the previous day, BTC/USD struggled to maintain higher levels, including the 2025 yearly open. At the time of this report, the pair was trading around $92,000, with market participants anticipating erratic price action around the rates announcement and subsequent press conference.
Crypto trader, analyst, and entrepreneur Michaël van de Poppe commented on the situation:
"FOMC meetings can be pretty tricky. The price action usually traps everyone before the actual move, so even if Bitcoin drops to $91K, I'm not putting too much weight on it."
Trader Daan Crypto Trades observed a lack of significant liquidity clusters on either side of the price in exchange order books following the upward move.
Daan Crypto Trades informed his followers on X, accompanied by data from monitoring resource CoinGlass:
"$BTC Took out that $93K-$94K liquidity cluster as mentioned yesterday. This was the most logical place to go from a liquidity perspective. With that taken out, there's no major area in close proximity. But as price is now consolidating, we can see some clusters building up around the $90K & $95K levels."
As previously reported, markets had largely priced in a high probability of the Federal Open Market Committee (FOMC) cutting rates by 0.25%. However, the outlook for future policy from Fed Chair Jerome Powell remained uncertain.
Trading firm QCP Capital elaborated in their daily "Asia Color" market update:
"The rate decision is almost fully priced, but the real focus will be on Powell’s tone. With little new data since the last meeting, the Fed is unlikely to pre signal a January move, leaving traders to dissect every nuance of the press conference."
Japan's Market Dynamics Introduce Familiar Crypto Risk
QCP Capital further noted that following the FOMC reaction, risk-asset traders would shift their attention to Japan, where its bond market is experiencing unusual conditions.
The Bank of Japan (BOJ) meeting scheduled for December 19 has become the next significant risk event.
"The BOJ meeting on 19 December has become the next major risk event. JGB yields are sitting at multi decade highs, with the 10Y near 1.95%, its highest level since 2007, and the 30Y around 3.39%, a record level and more than 100bps higher than a year ago."
Potential volatility could arise from these bond movements impacting the yen carry trade. This issue has been observed previously in 2024, when crypto markets reacted in real time to the phenomenon. Japan's central bank has signaled a potential divergence from the global trend by considering an interest rate hike.