"Bitcoin experiences volatile market ahead of FOMC… liquidity contraction and miners' profit deterioration overlap"

Bitcoin (BTC) has continued a vulnerable trend this week ahead of the Federal Open Market Committee (FOMC). Observers say volatility could widen as global liquidity slows, detailed U.S. economic data are released, and miners' profitability declines.

On the 8th, crypto-focused media AMB Crypto reported that the market is pricing in about an 87% chance of a 0.25 percentage point cut to a target rate of 3.50–3.75%. However, as seen in the September and October meetings, there have been cases where Bitcoin briefly rebounded before turning weak again around FOMC announcements, so caution remains.

Major economic data releases are concentrated through the 12th, leading some to predict that volatility could increase before the Fed's official announcement.

Matt Mena, research strategist at 21Shares, said, "Looking at recent indicators, inflation has remained at a stable level without signs of re-acceleration, which is the environment needed for markets to maintain confidence in Fed easing."

Global liquidity flows are also cited as a factor constraining Bitcoin's price. Liquidity from major central banks has remained in the range of about $28 trillion–$30 trillion since 2022, which analysts say is similar to periods when Bitcoin was trading in a range.

Mena said, "With more than $10 trillion sitting in money market funds (MMFs) and bond ETFs, if falling interest rates reduce the attractiveness of these funds, there is a greater chance that capital will re-enter risk assets."

On-chain indicators are also showing a weakening trend. The Hash Ribbon recently switched to a bearish signal, and the short-term holder profitability indicator (STH-NUPL) fell from about +0.05 in September to around –0.15 in November. This is described as a typical pattern seen in phases where short-term buyers increase stop-losses and price volatility expands.

The outlet said, "Bitcoin is exposed to several variables ahead of the FOMC, including declines in miners' revenue and weak liquidity," adding, "How the market digests easing expectations and whether dormant capital moves into risk assets will determine the near-term trend."