Bitcoin (BTC) extended its two-day slide on Wednesday after the minutes of the Federal Open Market Committee (FOMC) confirmed the Fed’s decision to keep 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 a rate of 2 percent over the longer term,” the FOMC minutes cited “developments in the Middle East” as factors fueling an environment of “uncertainty,” and the Fed emphasized its desire to maintain electability as it assesses “risks to both sides of its dual mandate.”
FOMC minutes with new statements in red. Source: CNBC
The Fed’s rate hike was in line with market expectations, but Bitcoin remained fragile during Chairman Powell’s speech.
Hyblock CEO Shubh Varma described the price action as “the usual reaction to post-FOMC news,” but also noted that BTC “recovered quickly to pre-announcement levels within hours, demonstrating strong underlying conviction.”
Adding data to support his view on the market, Varma said,
“The global bid/ask ratio jumped to 0.3 (one of the highest readings) while open interest fell as the price fell. This is classic post-FOMC position squaring and stop-hunt behavior, not conviction selling.”
BTC/USDT global supply and demand ratio. Source: Hyblock
Will support turn into resistance again?
Following the release of the FOMC minutes, BTC fell to an intraday low of $74,937, just below the 20-day simple moving average ($75,664) that some traders have identified as critical for confirmation of BTC’s reversal of support and resistance.
As Cointelegraph reported on Monday, after break above channel resistance on the daily chart, BTC required consecutive daily candle closes above the trendline, followed by a lower support test in the $76,500-$75,500 range.
BTC/USDT 1-Day Chart. Source: TradingView
Although all of the above happened, the failure to recapture the 20-MA and close above the trendline resistance can be interpreted as loss of momentum within a bullish trendpaving the way for Bitcoin to test the downside limit of the nearly 4-month-old channel.
Related: Bitcoin Falls as Traders Cut Risk Ahead of FOMC: Will Tradfi, Spot ETF Volumes Strengthen $70k Support?
Ahead of Chairman Powell’s speech, Glassnode analysts noted that Bitcoin traders were adding bearish leverage, stating rising open interest after Tuesday’s rise to $79,000, funding remaining neutral and the difference between spot and cumulative volume delta (CVD) in the futures market.
Bitcoin traders turn bearish ahead of FOMC minutes. Source: Glassnode / X
Additional analysis from Glassnode’s The Week Onchain report shown Bitcoin price action as “trapped below the market midpoint”, where $65,000 to $70,000 acts as support, but weak demand prevents sustained gains from forming.
According to the report, Bitcoin failed to overcome its true market value of $79,000, and a spike in short-term profit-taking from owners, along with net short margin futures, dampened Bitcoin’s short-term bullish momentum.
BTC entity-adjusted short-term realized profit of the owner. Source: Glassnode
While these factors make Bitcoin more vulnerable to a sharper decline, analysts say institutional flows into spot BTC ETFs and rising CME open interest have helped build a “dense accumulation cluster between $65k and $70k”.
CME Open Interest, US Spot ETF AUM Position Change. Source: Glassnode
