Analysis: Institutions shifting to cash ahead of FOMC in risk-off signal

Hedge funds are adopting risk-off positions ahead of the December U.S. Federal Open Market Committee (FOMC) meeting, according to an analysis by XWIN Research Japan, a contributor to CryptoQuant. The research firm noted that while Bitcoin holdings on major exchanges are declining, deposits of USDT and USDC are on the rise. This trend indicates that institutions are reducing their exposure to risk assets and accumulating cash-like assets, a move often interpreted as a pre-emptive hedge before a major market event. This pattern mirrors behavior seen before the FOMC announcements between August and October. During that period, short-term traders entered large long positions, causing funding rates to spike, only for them to plummet immediately after the announcements. Bitcoin's price followed a similar trajectory, staging a brief rally on rate-cut hopes before reversing from its peak. The analysis concludes that with stagnant Bitcoin futures open interest on the Chicago Mercantile Exchange (CME) and unchanged spot holdings among whale investors, the rising stablecoin inflows suggest institutions are focused on pre-emptive risk management rather than predicting market direction.