Markets don’t move because interest rates change — they move because expectations do. And every single beginner trader misses that difference.

If you’ve ever watched Bitcoin, stocks, or forex explode before an interest rate decision — or dump after “good news” — you’ve already felt the power of the Federal Open Market Committee (FOMC)… without understanding it.

This article breaks down how interest rates actually move markets, why FOMC meetings are trader liquidity events, and the exact playbook professionals use that beginners never learn.

Whether you trade crypto, equities, indices, or FX, this is the missing framework you need.

What Is the FOMC?

The Federal Open Market Committee (FOMC) is the policy-making arm of the U.S. Federal Reserve responsible for:

• Setting interest rates (Fed Funds Rate)
• Managing liquidity conditions
• Guiding inflation expectations
• Influencing global risk assets

Why this matters to traders

The U.S. dollar is the world’s reserve currency.

When the Fed changes policy, every major market reacts:

• S&P 500
• Nasdaq
• Bitcoin & crypto
• Gold
• Forex pairs
• Bonds & yields

Interest rates are the price of money.
When that price changes — or is expected to change — capital moves.

Interest Rates Explained Simply

Think of interest rates like gravity.

• Low rates → money flows into risk assets
• High rates → money flows into safety

What happens when rates rise?

• Borrowing becomes more expensive
• Liquidity tightens
• Valuations compress
• Risk assets struggle

What happens when rates fall?

• Capital becomes cheaper
• Leverage increases
• Speculation rises
• Risk assets thrive

This is why rate cycles and market cycles are inseparable.

The #1 Mistake Beginner Traders Make With FOMC

Most beginners think:

“If the Fed cuts rates, markets go up. If they hike, markets go down.”

That thinking gets traders liquidated.

Reality:

Markets move based on:

• Expectations
• Forward guidance
• Powell’s tone
• Dot plot projections
• Liquidity positioning

The decision itself matters less than the surprise.

The FOMC Playbook (How Pros Actually Trade It)

Professional traders break FOMC into four phases:

Let’s break each one down:

Phase 1: Pre-FOMC Expectations (Weeks Before the Meeting)

Markets price in rate decisions weeks in advance.

Tools professionals use:

• CME FedWatch Tool
• Treasury yields (2Y & 10Y)
• Dollar Index (DXY)
• Risk sentiment indicators

Example:

If FedWatch shows a 90% probability of a rate cut, that cut is already priced in.

So when it happens?

• Markets often sell the news

Phase 2: Liquidity Positioning (Days Before FOMC)

This is where most traps are set.

What typically happens:

• Volatility compresses
• Price ranges tighten
• Fake breakouts increase
• Retail traders over-leverage

This is because:

Institutions wait.
Retail trades noise.

This is not the time to predict direction — it’s the time to mark liquidity levels.

Phase 3: The Rate Decision (The 2:00 PM Trap)

At 2:00 PM ET, the Fed releases:

• Interest rate decision
• Policy statement
• Dot plot (quarterly)

What you’ll often see:

• Violent spike up
• Immediate reversal
• Stop hunts in both directions

This is algorithmic trading, not sentiment.

If you trade the first 5 minutes, you’re trading against machines.

Phase 4: Powell’s Press Conference (The Real Trade)

This is where trends are born.

Jerome Powell’s language matters more than the rate decision itself.

Traders listen for:

• “Data dependent”
• “Restrictive”
• “Higher for longer”
• “Financial conditions”
• “Inflation progress”

Markets move on tone, not headlines.

Real Case Study: FOMC vs Bitcoin (2022–2024)

2022: Aggressive Hiking Cycle

• Rates rose rapidly
• Liquidity drained
• Bitcoin fell from $69K → $15K

Not because of crypto fundamentals — but monetary tightening.

2023: Pause Narrative Begins

• Rate hikes slow
• Market anticipates cuts
• Bitcoin rallies 300%+

Markets moved before cuts happened.

2024: “Higher for Longer” Shock

• Powell signals caution
• Risk assets stall
• Volatility spikes

This is expectations vs reality in action.

Interest Rates and Crypto: The Hidden Correlation

Crypto traders often ignore interest rates — and pay for it.

Why rates matter for crypto

• Stablecoin yields compete with DeFi
• Liquidity determines speculative appetite
• Bitcoin trades like a liquidity asset, not a currency

When real yields rise, crypto struggles.
When real yields fall, crypto breathes.

The Economic Calendar Every Trader Must Track

Bookmark this. No excuses.

High-Impact Rate Events:

• FOMC Rate Decisions (8x/year)
• FOMC Minutes
• CPI (Inflation)
• PCE Inflation
• Non-Farm Payrolls (NFP)
• Jackson Hole Symposium

Pro Tip:

Markets often move harder on CPI than FOMC.

Sample FOMC Trading Calendar (Example)

(Always confirm dates via official Fed calendar)

How Beginners Should Trade FOMC (Safely)

This is the beginner-proof framework:

1. Do NOT predict direction

Let the market show its hand.

2. Reduce position size

Volatility kills over-leverage.

3. Trade after confirmation

Not during the announcement.

4. Watch correlated markets

DXY, yields, equities tell the truth.

Advanced Tip: Yield Curves & Risk Assets

Professionals track:

• 2-Year Treasury Yield
• 10-Year Treasury Yield
• Yield curve steepening / inversion

Because:

• Rising short-term yields = tightening
• Falling long-term yields = recession risk
• Risk assets respond accordingly

The Psychological Edge Most Traders Miss

FOMC events expose emotional traders.

• Fear of missing out
• Revenge trading
• Overconfidence
• News addiction

Pros stay flat. Beginners chase candles.

Frequently Asked Questions About Interest Rates & FOMC

Do interest rates affect crypto prices?

Yes. Interest rates influence liquidity, risk appetite, and capital flows, all of which directly impact crypto markets.

Why do markets move before FOMC decisions?

Markets price in expectations ahead of time using futures, yields, and macro data.

Is it safe to trade during FOMC?

For beginners, no. Volatility and algorithmic trading create high liquidation risk.

What matters more: rate decision or Powell’s speech?

Powell’s tone and forward guidance usually matter more than the rate decision itself.

Final Thoughts: Trade the Narrative, Not the Number

Interest rates are not a headline — they’re a system.

If you only watch:

• “Rate up or down”

You’ll always be late.

If you understand:

• Expectations
• Liquidity
• Positioning
• Narrative shifts

You trade with institutions, not against them.

That’s the FOMC playbook most beginners never learn — until it’s too late.

If this helped you, clap, bookmark and share with another trader who still trades headlines.

Because markets don’t reward predictions — they reward preparation.

Interest Rates for Traders: The FOMC Playbook Most Beginners Miss was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.

Crypto analyst Darkfost has highlighted reasons why the XRP price could soon witness a bullish reversal and potentially reach new local highs. This comes amid bearish sentiment in the market, which on-chain analytics platform Santiment said could set the stage for a reversal in the altcoin’s price.  

Why The XRP Price Could Soon See A Bullish Reversal 

In a CryptoQuant blog post, Darkfost stated that negative funding rates signal a potential XRP price reversal. The analyst noted that the altcoin is currently trading around 47% below its all-time high (ATH) set in July last year. Furthermore, the altcoin is said to have naturally entered a phase of distribution and correction after a gain of over 600% since November 2024. 

Darkfost assured that this type of movement is healthy after such a strong rally for the price. He further remarked that what stands out is the timing of the bearish consensus, as it did not form at the top but rather during a drawdown of more than 50%. Now, there are predominantly short positions on XRP, with funding rates on Binance mostly negative since December, indicating that leveraged short positions have the upper hand. 

The analyst noted that historically, the market tends to move against a late consensus. As such, while the accumulation of shorts creates short-term selling pressure, it also builds latent buying pressure. Darkfost said that if the XRP price starts to rise, these short positions could be liquidated, fueling the upward move. 

He revealed that a similar pattern has occurred for the token price since 2024. The first was between August and September 2024, and the second was during the April 2025 correction, when funding rates turned negative for a period before a bullish rebound occurred. The analyst stated that this price rebound was due to a shift in investor sentiment and funding rates returning to positive territory. 

A Rally Starter For XRP

In an X post, Santiment stated that XRP traders are showing major FUD, which they claimed is usually a rally starter for the XRP price. The on-chain analytics platform revealed that the altcoin has fallen into ‘Extreme Fear’ territory, with small retail traders becoming pessimistic about the token after a 19% decline from its recent high on January 5th. 

Santiment noted that historically, this level of bearish commentary has led to price rallies. This is based on the belief that prices move in the opposite direction to retail’s expectations more often than not. The altcoin has dropped again following the recent decline in the broader crypto market, led by Bitcoin. BTC fell below $87,000 yesterday on the back of U.S. political tensions, government shutdown risk, and ahead of this week’s FOMC meeting. 

At the time of writing, the XRP price is trading at around $1.88, down in the last 24 hours, according to data from CoinMarketCap.

Binance Coin climbed again over the weekend, pushing past the $900 mark and touching about $907 on Sunday after a sharp 24-hour uptick. Markets were calmer overall, with the broader crypto complex up 0.55% for the day while Bitcoin hovered above $92,000 and Ethereum traded beyond $3,100.

Market Reaction To Regulatory Shift

According to social posts from Changpeng Zhao, founder and former CEO of Binance who is also known as ‘CZ’, optimism around a possible new crypto cycle helped fuel demand. CZ linked the mood to a regulatory change, saying the Securities and Exchange Commission had removed crypto from its list of priority risks for 2026.

Based on reports, that move is being read by some investors as a sign of easing scrutiny, and it appears to have lifted sentiment across tokens.

I could be wrong, but Super Cycle incoming. https://t.co/6TLldEMmGA

— CZ BNB (@cz_binance) January 10, 2026

Institutional Buying Adds Fuel

Reports note sizable institutional flows into Bitcoin products. According to a filing, Wells Fargo bought 383 million of Bitcoin ETF shares, a figure that market watchers flagged as a large institutional stake.

Morgan Stanley also filed for its own spot Bitcoin ETF last week, which many see as more proof that big financial players are stepping in. Those actions are being cited by traders as one reason risk assets like Binance Coin could see more interest.

A packed US data week is ahead and traders say it could affect crypto angles. On Monday, the market will watch a speech by the FOMC president. On Tuesday and Wednesday, the US Consumer Price Index and the Producer Price Index are due.

Jobless claims come on Thursday, and a Fed balance sheet update lands on Friday. Any big surprise in those numbers can push liquidity flows and quickly change appetite for tokens.

BNB briefly reclaimed the $900 zone and was reported at $909 in some feeds as the four-hour chart showed a steady climb. Short-term resistance sits near $950, with a psychological barrier at $1,000.

Technical indicators offered cautious support for bulls: the MACD showed a bullish crossover with the blue line above the signal line, and the histogram printed positive bars, which suggests buying pressure building. The RSI sat around 56.10, under overbought levels, implying room for more gains.

Traders still point to a key support range near $850. A break below that could invite heavier selling and take prices down toward $820. The scenario of a quick pullback is real; prices that move fast up can move fast down. Market participants will be watching both the macro calendar and any fresh regulatory updates for clues.

Featured image from Unsplash, chart from TradingView

Bitcoin Magazine

Bitcoin Bulls Eye $94K Breakout Ahead of Crucial FOMC Rate Cut Decision

Bitcoin Price Weekly Outlook

Last week was a bit of a roller coaster ride, while bears kicked the price down to the $84,000 support level early in the week, bulls stepped in down there to rally the price up to the $94,000 resistance level. From there, the price dropped once again, just below $88,000 on Sunday morning, before seeing a small rally to close the week out at $90,429. This week, bitcoin bulls will look to the FOMC meeting on Wednesday to produce a much-anticipated rate cut to help facilitate a better investment environment for bitcoin and other assets. Climbing above $94,000 will be key for the bulls this week, if they hope to sway the market more in their favor.

Key Support and Resistance Levels Now

Bitcoin closed the week as a doji candle on Sunday, indicating indecision between buyers and sellers. The short-term outlook is slightly in the bulls’ favor, who will look to conquer the $94,000 resistance level. If they can establish this level as support, they will look to $101,000 as the next major resistance level, with sellers likely to begin slowing momentum down above $96,000. Beyond $101,000, we look to $104,000 and then a resistance zone between $107,000 and $110,000. Resistance gets very thick above $100,000.

Looking down to support levels, bulls will want to see $87,200 hold any daily closes to avoid another test of the $84,000 support level below. Any further touches of $84,000 will weaken it and make it less likely to remain in place as a floor. There is a $72,000 to $68,000 support zone, which will look to buoy the price below here. Below $68,000 would likely see the price chop around some, but look to hang onto the 0.618 Fibonacci retracement at $57,700. It is unlikely we would test this lower level for at least several weeks, though, if it even comes.

Outlook For This Week

Short-term momentum slightly favors the bulls early this week. The relative strength index (RSI) on the daily chart is showing some positive progress, generating higher highs off the 13 SMA support. This week, bulls will look for the 13 SMA to continue to act as support and help push the RSI above 60 into bullish territory. As long as bulls can remain above support levels heading into Wednesday’s FOMC meeting, they have a chance to tackle higher levels on a rate cut. If the FOMC meeting surprises everyone with no rate cut announcement, expect $84,000 support to fail.

Market mood: Very Bearish – Bulls have managed to put in a small rally here over the prior two weeks, but the price action has been lackluster and is still favoring the bears.

The next few weeks
The bearish cross in place on the monthly MACD oscillator will continue to weigh on price throughout December and likely into January as well, barring any major moves up in price to undo it. Bitcoin price will need to continue to climb higher and maintain closes above the 100-week simple moving average (SMA), which sits at $84,700 heading into this week. Even if bulls can manage to keep momentum going over the coming weeks, there is heavy resistance sitting at $110,000 and above, and the price is very likely to pull back from that level (or lower) on the weekly chart. Doing so would put in a convincing lower high on the weekly chart and provide the bears with renewed conviction on a longer-term top being in place.

Terminology Guide:

Bulls/Bullish: Buyers or investors expecting the price to go higher.

Bears/Bearish: Sellers or investors expecting the price to go lower.

Support or support level: A level at which the price should hold for the asset, at least initially. The more touches on support, the weaker it gets and the more likely it is to fail to hold the price.

Resistance or resistance level: Opposite of support.  The level that is likely to reject the price, at least initially. The more touches at resistance, the weaker it gets and the more likely it is to fail to hold back the price.

SMA: Simple Moving Average. Average price based on closing prices over the specified period. In the case of RSI, it is the average strength index value over the specified period.

Fibonacci Retracements and Extensions: Ratios based on what is known as the golden ratio, a universal ratio pertaining to growth and decay cycles in nature. The golden ratio is based on the constants Phi (1.618) and phi (0.618).

Oscillators: Technical indicators that vary over time, but typically remain within a band between set levels. Thus, they oscillate between a low level (typically representing oversold conditions) and a high level (typically representing overbought conditions). E.G., Relative Strength Index (RSI) and Moving Average Convergence-Divergence (MACD).

RSI Oscillator: The Relative Strength Index is a momentum oscillator that moves between 0 and 100. It measures the speed of the price and changes in the speed of the price movements. When RSI is over 70, it is considered to be overbought. When RSI is below 30, it is considered to be oversold.

MACD Oscillator: Moving Average Convergence-Divergence is a momentum oscillator that subtracts the difference between 2 moving averages to indicate trend as well as momentum.

This post Bitcoin Bulls Eye $94K Breakout Ahead of Crucial FOMC Rate Cut Decision first appeared on Bitcoin Magazine and is written by Ethan Greene - Feral Analysis and Juan Galt.