Bitcoin Experiences Classic Pre-FOMC Decline
Bitcoin (BTC) started the week with a notable 2% drop, falling short of gains seen in major US stock indices and gold. Data from Cointelegraph Markets Pro and TradingView indicated BTC/USD retreating from its daily highs as Wall Street opened on Monday.
This price behavior aligns with a recurring pattern observed ahead of Federal Reserve interest rate decisions. Crypto analyst and trader Michaël van de Poppe highlighted this trend, noting that Bitcoin typically weakens in the days leading up to Federal Open Market Committee (FOMC) announcements.
Markets are currently pricing in a 0.25% rate cut expected at the FOMC meeting scheduled for Wednesday, which may influence BTC’s trajectory in the short term.
Bitcoin Diverges From Stocks and Gold
While the S&P 500 and Nasdaq Composite Index advanced at the open, Bitcoin diverged by moving lower. Gold prices also eased slightly, retreating below $3,655, some $20 off record highs.
This divergence reflects Bitcoin’s unique sensitivity to macroeconomic events, particularly Federal Reserve policy decisions, which often trigger preemptive market adjustments.
Bullish Technical Signals Suggest Potential Upside
Despite the short-term weakness, technical analysis offers reasons for optimism. A hidden bullish divergence on Bitcoin’s weekly relative strength index (RSI) has been confirmed, a pattern that historically precedes significant price gains.
Popular trader BitBull emphasized that every bullish or hidden bullish divergence since 2023 has resulted in substantial BTC rallies. Another trader, Merlijn, described the RSI divergence as a strong signal that Bitcoin’s price upside is “inevitable” given the broader macroeconomic context.
Market Sentiment Remains Mixed Amid Stock Gains
Investor sentiment reflects a complex picture. Although US stocks are reaching new highs, sentiment surveys indicate prevailing caution. The Crypto Fear & Greed Index stands at a neutral 53, suggesting neither excessive fear nor greed among cryptocurrency investors.
Similarly, Mosaic Asset Company observed that large investors remain net short in stock futures, a contrarian indicator often associated with upward market momentum. The firm described current sentiment as a “tailwind” for stocks advancing amid a “wall of worry.”
Conclusion
Bitcoin’s 2% dip ahead of the FOMC meeting exemplifies a well-documented pattern of pre-Fed price pullbacks. While short-term downside risks persist, bullish technical indicators and market expectations of a rate cut could catalyze a rebound. Traders and investors should monitor the Federal Reserve’s announcement closely, as its outcome is likely to shape Bitcoin’s next directional move.
Disclaimer: This article does not constitute investment advice. Market participants should conduct independent research before making trading decisions.
FinOracleAI — Market View
Bitcoin’s 2% decline ahead of Wednesday’s FOMC meeting aligns with historically observed pre-announcement volatility, reflecting cautious positioning by investors. The anticipated 0.25% rate cut by the Federal Reserve represents a potential catalyst for price appreciation, supported by confirmed hidden bullish RSI divergences suggesting underlying strength.
Risks include unexpected Fed guidance or macroeconomic shocks that could extend the correction. Key indicators to watch include the FOMC statement, market reaction in risk assets, and shifts in investor sentiment.
Impact: neutral
