Bitcoin is holding just above $64,000. A Federal Reserve rate decision is coming this week. That decision will set the market's direction for weeks ahead.
What happened to the price
The price broke below $65,000 twice this week. On Tuesday, bitcoin dropped as low as $63,100, its lowest level since July 17. But by Wednesday morning the asset bounced back and traded near $64,300, adding about 0.75% for the day.
The reason is fairly simple. Investors are waiting for the Fed's decision and don't want to take risks beforehand. US inflation sits at 4.1%. That keeps a rate hike on the table, even as oil prices ease at the same time.
Why investors are on edge right now
In recent years crypto markets got used to the Fed cutting rates rather than raising them, and each cut fed appetite for risk assets. This time it's different. The 4.1% inflation figure broke that familiar script, leaving the market in unfamiliar territory.
Just a week ago some traders were pricing in a pause or even a token cut, banking on cheaper oil. Now the scenario looks different, and that uncertainty is weighing on the price harder than the hike itself would.
Higher rates make the dollar and bonds more attractive for conservative money. Risk assets, crypto included, lose some demand in that environment. That's why traders are trimming positions ahead of the official announcement instead of waiting for confirmation.
Asia is adding pressure too. A chip-stock crash spilled over into Wall Street, and some analysts have started talking about a repeat of the yen carry trade unwind ahead of Friday's Bank of Japan meeting. When several negative signals stack up at once, risk assets react first.
Money keeps leaving ETFs on day four
US spot Bitcoin ETFs logged outflows for four straight trading sessions. The total came to roughly $526 million. In the latest session alone, funds saw about $49.8 million walk out the door.
Technically, an ETF outflow means authorized participants redeem fund shares for the underlying coins, which then flow back onto the market. When demand cools even for a few days, it shows up right away in SoSoValue's daily numbers. Who exactly is pulling money out is hard to say. Exchange data shows the aggregate fund balance, not individual investor decisions.
The number looks alarming, but the full picture matters more. Cumulative net inflows into these products since launch remain positive, at $51.3 billion. Total assets under management stood at $77.2 billion as of Tuesday's close. The recent outflow looks more like a correction than a panicked exit.
Trading volume also points to a cooler market: spot volume on Binance dropped to $35 billion in July, compared with $246 billion in November 2024. The market has gone quiet, and it shows.
Who gets hit hardest
Short-term traders and leveraged positions are the most exposed. When the price drops to $63,100 and bounces back to $64,300 within hours, that's a perfect setup for liquidations.
Derivatives venues tend to amplify any price move. A small drop on the spot market turns into a wave of forced closures there within minutes, which is why the charts on days like this look sharper than reality.
Long-term holders have less to worry about. The market has been through similar swings before Fed meetings, and they usually don't change the longer trend.
For Ukrainians planning to sell Bitcoin for hryvnia, this volatility hits directly too. Exchange rates react to global price swings within minutes, and the dollar's own moves against the hryvnia add extra pressure. It's worth checking the current rate right before a transaction rather than relying on what it looked like that morning.
What comes next
The Fed's decision will be known this week. It will answer the main question: a rate hike or a pause. The market is pricing in both scenarios, which is exactly why swings are this sharp right now.
If the Fed announces a pause, the market will likely breathe a sigh of relief and try to retake $65,000. If there's even a hint of a hike, the sell-off could deepen, and ETFs would probably log another wave of outflows.
Recent Fed meetings follow a simple pattern. The first hours after a decision shake the market hardest, and volatility usually fades within a day or two. Until the announcement, bitcoin will most likely stay in a tight range near $64,000, and sharp moves in either direction won't surprise anyone.
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