Bitcoin faced sharp swings on Wednesday as traders braced for unpredictable market moves linked to the United States Federal Reserve’s interest rate announcement. The leading cryptocurrency briefly surged above $94,500, yet failed to hold the crucial 2025 yearly open, slipping back toward $92,000 by the Wall Street opening bell.

Price Reverses After Failing to Hold Key Levels

Data from TradingView showed Bitcoin pulling back from Tuesday’s peak of $94,650. The retreat placed BTC below the yearly open, creating renewed caution among market participants. Several traders warned that volatile spikes are common during Federal Open Market Committee (FOMC) meetings, a period often marked by misleading price action.

Crypto analyst Michaël van de Poppe commented that FOMC sessions frequently trap traders before the real direction emerges. He suggested that even a move down to $91,000 would not be enough to draw firm conclusions about the market trend.

Liquidity Gaps Add to Market Uncertainty

Market analyst Daan Crypto Trades highlighted that Bitcoin had swept a major liquidity pocket between $93,000 and $94,000, leaving no significant clusters nearby. According to data from CoinGlass, new liquidity zones were beginning to form around $90,000 and $95,000. This lack of nearby liquidity raised the likelihood of erratic moves in either direction as traders reacted to the rate announcement.

Focus Shifts to Powell’s Tone at the Fed

Markets broadly expected the Fed to announce a 0.25 percent rate cut. The greater uncertainty centred on Fed Chair Jerome Powell’s comments during the press conference. QCP Capital noted in its “Asia Color” update that recent economic data provided little new guidance, increasing the chance that Powell’s tone would drive sentiment rather than the rate change itself. Traders were poised to analyse every detail for clues about the likelihood of another cut in January.

Japan Emerges as the Next Major Risk Event

Once the FOMC outcome is absorbed, attention is expected to turn to Japan. QCP Capital warned that the Bank of Japan’s 19 December meeting may trigger further volatility. Japanese Government Bond yields are at levels not seen in decades. The 10 year yield is near 1.95 percent, its highest point since 2007. The 30 year yield has climbed to around 3.39 percent, more than 100 basis points above last year.

Rising yields could impact global markets through the yen carry trade, a dynamic that shook crypto markets in 2024. With Japan’s central bank signalling that it may raise rates, traders are preparing for potential knock-on effects across risk assets, including Bitcoin.

Outlook

Bitcoin’s failure to hold above the yearly open combined with shifting global monetary conditions has set the stage for heightened volatility. With the FOMC decision followed closely by Japan’s key policy meeting, traders face an uncertain landscape in the final weeks of the year.