Leveraged bets on FOMC meeting ‘guaranteed recipe to lose money’ — Trader

A crypto trader warns that going heavy on leverage before the monthly United States interest rate decision is a surefire way to lose money in crypto trading. 

After the Federal Reserve’s statement confirmed that the US central bank intended to leave interest rates unchanged in its target range between 4.25% and 4.5%, Bitcoin’s price barely moved, as the market had already widely expected no change in the interest rate.

However, after Fed chair Jerome Powell said the probability of a recession is “not high,” despite independent economists raising the odds of one, the overall crypto market saw an upswing, leaving traders betting on the downside caught off guard. 

“A guaranteed recipe to lose money,” MN Trading Capital founder Michael van de Poppe said in a March 19 X post. 

CoinGlass data, which tracks a 12-hour window, shows $188.77 million was liquidated from the crypto market, with $127.80 million of that being short positions.

Approximately $257.03 million in short positions have been liquidated over the past 24 hours. Source: CoinGlass

Bitcoin (BTC) surged 3.84% in six hours after Powell’s speech to hit $87,427 before pulling back to $85,760 by publication. Ether (ETH) climbed 2.27% in the same period, while XRP (XRP) gained 2.40%, adding to its 7.50% rally leading into the interest rate announcement, according to CoinMarketCap data.

“The initial statement isn’t as important. The words from J. Powell are,” van de Poppe said, adding, “That’s what likely defines Bitcoin price action for the coming period.” 

Bitcoin is up 3.49% over the past 24 hours. Source: CoinMarketCap

Related: Bitcoin risks new 'death cross' as BTC price tackles $84K resistance

Crypto trading account BitcoinHyper said, “FOMC meeting made Bitcoin pump directly into the big liquidation level.”

“Even if BTC goes higher, this is not a good level to look for new long positions,” the trading account said.

Matt Mena, crypto research strategist at 21Shares, made a similar forecast, saying that while the US Federal Reserve’s “dovish shift” on interest rates could give Bitcoin a short-term boost, it may not be sustainable.

“Bitcoin is likely to remain in consolidation mode until a clear catalyst emerges,” Mena said. “Looking further ahead, the broader macro environment remains supportive of a bullish case for BTC,” Mena said in a statement viewed by Cointelegraph.

According to Powell, the median forecast from FOMC members is that interest rates will be at 3.9% at the end of 2025 and 3.4% at the end of 2026.

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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.