Bitcoin traded through a wide range on Wednesday, climbing as high as $81,687 before falling below $80,500, then recovering to about $81,000 in the minutes after the Federal Reserve announced it would hold interest rates steady.
The central bank kept its benchmark rate in the 3.75%-4.00% range, a decision that had been widely anticipated heading into the 2 p.m. ET announcement. The Fed had previously raised rates in September.
Volatile Session Ahead of the Decision
Trading was choppy in the hours before the FOMC statement. According to CME Group's Fedwatch tool, market consensus hours before the decision pointed to roughly a 90% probability that the Fed would leave rates unchanged. Analysts noted that persistent inflation continues to support future rate increases, while policymakers were widely expected to pause ahead of the upcoming U.S. midterm elections.
Bitcoin's path was uneven throughout the session:
- After facing rejection at $80,500 on Tuesday afternoon, bitcoin trended up to $80,700 before a sudden rally pushed it to $81,136.
- Around 5:35 p.m. ET, the price began sliding to just above $80,500, followed by a relief rally that nearly erased all losses by midnight.
- Early Wednesday, bitcoin rallied to an intraday peak of $81,687 and briefly consolidated around $81,500.
- Hopes of a breakout above the $80,000-to-$82,000 range faded as the price plunged below $80,400.
Following the Fed announcement, bitcoin traded near $81,000, up about 0.5% over the prior 24 hours.
Leveraged Positions Squeezed
The rapid swings forced out overleveraged traders across derivative markets. On-chain analytics firm Glassnode noted that the price movement squeezed overleveraged market participants across key liquidity clusters.
Data from Coinglass showed bitcoin liquidations nearly reached $58 million on Wednesday, with liquidated short positions accounting for more than $46 million of that figure. Across the broader cryptocurrency market, total liquidations topped $167 million, of which short bets made up approximately $110 million.
