Bitcoin Price Braces For FOMC Volatility As History Shows Major Post-Fed Sell-Offs

Bitcoin is navigating a turbulent backdrop as it heads into the Federal Reserve's January 2026 policy meeting. Market participants are closely watching for a potential shift in monetary policy, with historical patterns showing significant sell-offs in the aftermath of past FOMC decisions. Price has been range-bound near $88,000, with analysts pointing to liquidity and macroeconomic sentiment as key drivers of near-term volatility.

The crypto market is also grappling with large outflows from Bitcoin ETFs. In the week ending January 23, spot Bitcoin ETFs recorded $1.33 billion in net redemptions, the second-largest weekly outflow on record. Ethereum ETFs followed with $611 million in withdrawals, highlighting a broad shift away from risk assets.

Political developments and global uncertainty are compounding the pressure. A recent spike in geopolitical tensions, including Trump's tariff threats and ongoing Washington gridlock, have driven capital toward traditional safe-havens like gold. At the same time, the Crypto Fear & Greed Index has plummeted to the "extreme fear" zone, with investors avoiding risk positions.

Why Did This Happen?

Historically, Bitcoin has experienced sharp corrections after FOMC meetings. In 2025, BTC fell in seven out of eight Fed decisions, with a 9% average drop. A key reason is the Fed's influence over risk sentiment. Even when no rate change is expected, the tone of the statement or press conference can trigger volatility.

The current backdrop is no different. While the CME FedWatch tool shows a 97% probability of no rate cut, traders are bracing for a hawkish pivot in tone. Niels, a market analyst, noted that the market will likely react more to Fed communication than to the rate decision itself.

What Are Analysts Watching Next?

Rick Rieder, the rising favorite for the next Fed chair, has been vocal about Bitcoin's potential. As BlackRock's global head of fixed income, Rieder has long argued that BTC could replace gold as a store of value. His odds of being named to the role have surged to nearly 40% on prediction markets.

This potential appointment has fueled speculation about a Fed more open to crypto assets. Rieder's 2020 comments that Bitcoin is "here to stay" have made him a key figure in the market's eyes. If confirmed, his influence could drive regulatory and monetary policy shifts that benefit Bitcoin.

What's Driving the Market Structure Changes?

Meanwhile, market structure developments are gaining traction. The NYSE has announced plans to launch a 24/7 blockchain-based tokenized exchange for stocks and ETFs, signaling broader adoption of blockchain in traditional finance. This move aligns with the growing interest in RWA tokenization, with projections of a $400 billion market in 2026.

The tokenization trend is part of a larger shift. As Changpeng Zhao noted in a recent statement, governments globally are exploring tokenizing assets to realize financial gains and spur economic development. These changes could reshape how assets are traded and stored, potentially increasing demand for Bitcoin as a digital store of value.

What's the Outlook for Bitcoin's Price?

Bitcoin's price action has been subdued in recent weeks. After a brief rebound to $97,000 in October 2025, the price has struggled to regain momentum, falling below $100,000 in November 2025. Recent on-chain data shows that large holders have been accumulating quietly, with whale wallets holding between 1,000 and 100,000 BTC increasing balances.

However, the market remains constrained by a key cost-basis sell wall between $90,160 and $90,590. Until Bitcoin breaks above this level, upside momentum is likely to remain capped. On the downside, support appears strong near $84,400, where over 395,000 BTC are held at cost basis.

The coming week will be pivotal. The FOMC meeting on January 28, along with Trump's speech and five macro releases on January 27, could set the tone for Bitcoin's near-term direction. A red close for the month appears likely given the current market setup.

Bitcoin traders and investors are bracing for a high-stakes week, with macroeconomic developments, geopolitical shifts, and regulatory changes all playing a role in the outcome.