Bitcoin Daily Dip Hits 2% as ‘Classic’ BTC Price Action Precedes FOMC

Bitcoin Slips While Traditional Markets Rally Ahead of Key Fed Decision

Bitcoin (BTC) is starting a pivotal week on the back foot, experiencing a notable 2% dip as traders brace for the upcoming U.S. Federal Reserve interest rate decision. While U.S. stocks and gold showed strength, Bitcoin diverged, showcasing what many analysts are calling classic price behavior ahead of a major macroeconomic event.

As of Monday’s Wall Street open, data showed BTC struggling to maintain its footing, sliding from its daily highs. This price action stood in stark contrast to traditional markets, where the S&P 500 and Nasdaq Composite Index posted gains. Gold also continued its impressive run, inching closer to its all-time high. This divergence has left many in the crypto community wondering what’s next, but seasoned traders see a familiar pattern unfolding.

The Pre-FOMC Jitters: A Familiar Story for BTC

The primary driver behind Bitcoin’s current sluggishness is the highly anticipated Federal Open Market Committee (FOMC) meeting scheduled for this Wednesday. Historically, Bitcoin and the broader crypto markets tend to exhibit volatility and uncertainty in the days leading up to these announcements. Traders often reduce their risk exposure, leading to lower volumes and indecisive price movements.

Many analysts on social media have pointed out that this is <‘classic’ BTC price action>, characterized by a slight downturn or consolidation. The market is essentially holding its breath, waiting for guidance from the Federal Reserve. The consensus expectation is for a 0.25% rate cut, a move that would typically be bullish for risk assets like Bitcoin by increasing market liquidity. However, the official announcement and the subsequent commentary from the Fed Chair will be the true catalyst.

As one market observer noted, this period is often marked by “indecisive price action and positions derisking on both sides.” The market builds a tight range, stacking liquidity above and below, before the news event triggers a sharp move to capture it.

What Different Rate Scenarios Could Mean:

• Expected 0.25% Cut: This is largely priced in. The market may see a “sell the rumor, buy the news” event, potentially leading to a sharp rally post-announcement.
• A Larger 0.50% Cut: A more aggressive cut could be seen as highly bullish, potentially sending Bitcoin soaring as it signals a stronger dovish stance from the Fed.
• No Cut or Hawkish Tone: This would be a major surprise and likely trigger a significant sell-off across both crypto and traditional markets.

Looking Deeper: Hidden Bullish Signals Emerge

While the short-term price action appears bearish, a closer look at the technical charts reveals underlying strength that has bulls feeling optimistic. Several analysts have highlighted a confirmed hidden bullish divergence on Bitcoin’s weekly Relative Strength Index (RSI).

In simple terms, a hidden bullish divergence occurs when the price of an asset forms a higher low, while the RSI indicator forms a lower low. This pattern suggests that despite any short-term weakness, the underlying bullish trend remains intact and is likely to continue. Some traders believe this technical signal makes significant price upside almost “inevitable” once the macro uncertainty clears.

Sentiment Remains a Tailwind for Growth

Interestingly, market sentiment for both Bitcoin and stocks is far from euphoric, despite being near record highs. The Crypto Fear & Greed Index is currently hovering in “Neutral” territory with a score of 53/100. This is a healthy sign, as it indicates the market is not over-leveraged or excessively greedy, which often precedes major corrections.

This cautious sentiment creates a “wall of worry” for the price to climb. When the prevailing emotion is fear or neutrality, it leaves more room for upside as sidelined capital can re-enter the market. Large investors in the stock market have reportedly been net short, a contrarian signal that often points to further gains.

As the market waits for the FOMC’s decision, traders are closely watching key support and resistance levels. The outcome on Wednesday will likely determine whether Bitcoin breaks out towards new highs or experiences a deeper, short-term pullback. For now, patience remains the name of the game.