Objectives: Diamond tools are widely used in fields such as oil drilling, geological exploration, and stone processing, among which sintered metal bond diamond tools have become the most representative due to their wide applicability and strong durability. Cobalt (Co) has become the preferred material for preparing diamond tools due to its excellent physical properties, but its price is relatively expensive. As market competition gradually intensifies, the application range of Co is becoming limited. It has been found that Fe-based pre-alloy powder has similar properties to Co and can be used as an important way to reduce costs. However, Fe-based diamond tools face problems such as high sintering temperature, narrow controllable process range, easy erosion of diamond, weak holding force, and the tendency for the matrix to burn during production. Additionally, the Sn element is prone to segregation and loss during long-term sintering in the furnace, resulting in unstable performance of diamond tools. This article describes the preparation of FeCuNi-Cu/Sn/Bi alloy powder using a multi-layer coating process to improve the densification of diamond matrix sintering and reduce component segregation. Methods: Co powder, Cu powder, Fe powder, Sn powder, Ni powder, and FeCuNi alloy powder were selected, and Cu, Sn, and Bi were respectively plated onto the surface of FeCuNi alloy powder by chemical methods, forming a uniform coating on the surface. Metal powder and diamond were mixed using a three-dimensional mixer for 2 hours. After mixing, the required weight of uniform powder was weighed, and sample blocks with dimensions of 4 mm × 8 mm × 40 mm were prepared using a hot press sintering machine. The mold material was graphite, and 4 sample blocks were prepared for each group. The experiment was repeated twice. For the tested materials, Rockwell hardness was measured, as well as the three-point bending strength. The microstructure and energy spectrum were analyzed using an electron microscope, and the changes in composition, structure, and mechanical properties of the tire body with fewer joints under different processes were compared and analyzed. Four formulations of sintered diamond tool bodies were designed, and their physical properties were tested. Eight samples were prepared for each formulation. After removing the maximum and minimum values, the average value of the data was calculated for analysis. Results: The hardness of the coated alloy powder formulation body decreased from 110 HRB to 106 HRB, but the decrease was less than 4%, indicating that the hardness remained similar. After adding the coated alloy powder, the flexural strength of the tire body increased by more than 10%. Specifically, for the formulation containing FeCuNi-Bi powder, the flexural strength increased from 945 MPa to 1,120 MPa, an increase of nearly 20%. The improvement was due to the even distribution of low-melting point elements coated on the surface of the alloy powder, which reduced the porosity of the matrix during the sintering process, thereby improving the bending strength of the matrix. Analysis of the microstructure of the four sintered tire bodies revealed that Sn in the original formula reacted with metal elements such as Cu in the tire body, gradually forming CuSn alloy. The distribution of Sn was uneven, and segregation was severe. As the sintering temperature increased, some CuSn alloys with higher Sn content began to melt. However, the wettability between the liquid CuSn alloy and Co or Fe particles was poor, and the distribution in the tire body was discontinuous. The vast majority of the CuSn liquid phase could not penetrate the Co and Fe skeleton phases to form a network connection. Under the interaction of sintering temperature and pressure, a strong and dense bond could not be formed, resulting in an uneven microstructure of the tire body and negatively affecting the performance and application of diamond tools. After adding FeCuNi-Cu/Sn/Bi alloy powder to the formula, the distribution of the coated alloy powder was relatively uniform. During sintering, Sn and Bi on the surface of FeCuNi alloy powder particles melted first, reacting with Cu to form liquid phases such as Cu-Sn and Cu-Bi. These phases gradually diffused along the FeCuNi alloy powder particles from the outside to the inside, entering the gaps between Fe, Ni, FeCuNi and other particles. Ultimately, Cu-Sn and Cu-Bi alloys formed a continuous network structure, encapsulating and bonding particles such as FeCuNi, Fe, and Ni, making the composition and microstructure distribution of the diamond tool bodies more uniform and dense, thus avoiding component segregation. Conclusions: FeCuNi-Cu/Sn/Bi alloy powder was prepared by chemically plating Cu, Sn, and Bi onto the surface of FeCuNi alloy powder. After adding the metal-coated alloy powder to the formula, the microstructure of the matrix was refined, and both hardness and strength were improved. The FeCuNi-Cu/Sn/Bi alloy powder, using coating technology, was sintered to obtain a denser matrix with higher diamond holding force and better mechanical properties.