Bitcoin Faces Critical Test as FOMC Nears and On-Chain Signals Warn of Volatility

Low rate cut odds and weak on-chain signals place Bitcoin at risk of heightened volatility around the FOMC decision.

As the financial markets await the outcome of the first FOMC meeting of the year, experts are predicting its effect on Bitcoin. In the past, rate decisions have often triggered sharp price swings for crypto assets. And with the outlook currently hawkish, traders are watching whether the firstborn coin can hold key support levels or face another pullback.

FOMC Decision Approaches as Bitcoin Struggles to Hold Ground

The FOMC meets eight times each year to decide interest rates and other US monetary policy. Expectations of a January rate cut remain very low, at just 2.8%. In fact, economists surveyed by FactSet expect rates to stay within the 3.5% to 3.75% range after the previous year saw three cuts.

Earlier rate cuts drove risk appetite, driving Bitcoin to new highs. But ahead of this month’s FOMC decision, the OG coin appears to have lost steam. At the time of writing, Bitcoin sits around $87,000, about 30% below its yearly peak.

Analyst Ali Martinez mentioned that sentiment around BTC leaned bearish during periods surrounding last year’s FOMC meetings. Out of eight meetings, seven were followed by notable declines, with only one producing a short-lived upside move.

HOW BITCOIN $BTC WILL REACT TO FOMC MEETING, LAST TIME IT DROPPED BY -9%

The Federal Open Market Committee (FOMC) is responsible for setting US monetary policy, meeting eight times a year to decide interest rates that shape liquidity conditions across global markets.

Looking… pic.twitter.com/YBVr0fBXxn

— Ali Charts (@alicharts) January 27, 2026

Periods after the meetings always followed a consistent pattern of weakness. For instance, the OG coin fell by 27% after last year’s January meeting. Another sharp decline followed the March decision, with the price dropping 14%.

Interestingly, the asset reacted positively after the May meeting, gaining 15% shortly after the announcement. However, it slippedby 8% and another 6% after the June and July meetings, respectively.

Prices fell after the September meeting, with the October decision hitting the OG crypto down by 29%. And after the final meeting of the year on December 10, Bitcoin fell by 9%.

Optimism often builds before decisions on hopes of lower rates supporting crypto. Actual reactions after announcements, however, have leaned negative in most cases. Such behavior keeps FOMC events among the most sensitive periods for Bitcoin traders.

On-Chain Metrics Flag Key BTC Support as Macro Risks Build

Market analyst BitBull stated that Bitcoin has entered a critical decision zone. Price currently sits near the Active Investor Mean, a level where the average active buyer is near breakeven. Markets rarely stay at such levels for long.

_Image Source: _X/BitBull

According to the crypto commentator, several onchain metrics define the current structure:

• Active Investor Mean sits near current price which is a balance point.
• Short-Term Holder Cost Basis rests around $96,500, putting recent buyers in loss.
• True Market Mean stands near $80,700 demand zone.
• Realized Price remains far lower at roughly $56,000.
• Long-term holders remain largely unaffected by recent weakness.

According to BitBull, short-term holders may sell into any bounce, adding pressure above price. Active investors face a key choice, while long-term holders continue to show confidence.

Holding above $87,500 would signal defense by active capital. Losing that level often pushes the price toward $80,700, where stronger demand has appeared in past cycles.

Ali Martinez also noted that Bitcoin recently slipped below the Realized Price-to-Liveliness Ratio. In previous cycles, such moves often preceded a drop toward the Realized Price. While no outcome is guaranteed, the signal adds weight to downside risks during macro-heavy weeks.

Market commentator MartyPart warned traders to brace for sharp swings over the next few days. According to him, several high-impact events cluster within that window, which could drive uncertainty and short term risk.