Bitcoin (BTC) heads into this week’s Federal Reserve meeting with traders once again concerned about whether a rate cut will materialize and whether it could repeat the sharp declines seen after the last two rate cuts on September 17th and October 29th.
The result could set the direction for the market towards the end of the year, with analysts focusing on leverage and stablecoin flows rather than the headline decision itself.
Another short-term rebound, then weakness
According to XWIN Research Japan, interest rate cut announcements in September and October both followed a similar pattern, with prices rising in the days leading up to the announcements, briefly rising after the announcements, and falling in the weeks following. The group explained that this setup is perfect for the classic “buy the rumor, sell the news” response.
XWIN also added two notable on-chain signals. These are the stablecoin exchange reserves, which show whether new funds are being accumulated to buy the dip, and the funding rate, which reflects how crowded leveraged positions are.
“The FOMC in December may follow the familiar pattern of ‘first rising, then falling’,” market sources said. “However, the decisive factor will be stablecoin inflows and the leverage structure of the market.”
In the opinion of the company’s experts, large amounts of long-side funding could make Bitcoin vulnerable to new liquidations. Over the weekend, traders saw more than $500 million in leveraged positions wiped out as illiquid markets caused wild volatility.
He added that almost all current demand is coming from the US, with Europe and Asia being net sellers, which provides support for short-term price fluctuations, but leaves the market heavily biased towards a single region.
Bitcoin was trading around $91,500 ahead of the meeting, up about 2% in the past 24 hours but still down nearly 11% over the past month, according to CoinGecko data.
Long-term effects still show accumulation
Beyond the Fed’s immediate decision, a complex set of fundamental factors are at play. For example, CryptoQuant analyst GugaOnChain recently stated that Bitcoin is struggling with the psychologically important $100,000 level.
According to them, the asset’s growth differential has fallen into negative territory, meaning its market capitalization is falling faster than its realized value. This number tends to move closer to weakening market structure and may help explain the hesitation to move below six-digit territory.
At the same time, another assessment by XWIN shows that the long-term holding base of cryptocurrencies is strengthening, with a noticeable decline in profit taking by long-term holders.
Moreover, institutional adoption continues its silent march, with global Bitcoin treasury holdings by countries, companies, and foundations exceeding the 4 million BTC threshold, marking a gradual transition from a speculative asset to a strategic reserve asset.
But this week’s focus will largely be on one thing: how Bitcoin moves after the FOMC’s comments. Japanese analyst Fumihiro Arasawa advised traders to take a “defensive stance” before and after the meeting, as past rate cuts have led to severe volatility despite sounding positive.
XWIN shared a similar opinion, warning that the most realistic strategy would be for market participants to focus on “reducing exposure and preparing risk-managed scenarios” rather than betting on the outcome.
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