All Eyes On FOMC Negative Inflation Could Dim Cryptocurrency Hopes

All Eyes On FOMC Negative Inflation Could Dim Cryptocurrency Hopes


  • Monetary conditions have tightened and cryptocurrencies have recovered from last week’s sudden negative inflation dip.
  • Analysts at Arcane Research are anticipating huge volatility in the price of Bitcoin due to conflicting expectations for a price hike.
  • Analysts maintain a bearish view on Bitcoin, predicting a decline in BTC if the asset fails to sustain the $18,923 level.

Cryptocurrency traders await September 21 from the Federal Open Market Committee There is a significant increase in volatility in the price of Bitcoin and altcoins. Bitcoin price suffered a 15% drop over the past seven days as cryptocurrency traders shed risk and prepared to tighten monetary policy.

Read also: XRP Price: What to Expect from the CFTC Commissioners Meeting with Brad Garlinghouse

Bitcoin price continues to fall along with rising interest rates

The price of Bitcoin fell along with the decline of stocks last week. August CPI beat expectations by 0.2%, with year-over-year inflation at 8.3%. Bitcoin price saw a massive drop in response to the risk-off market reaction to the CPI news.

US consumer price index year on year

US consumer price index year on year

The Bitcoin price drop last week was the worst compared to previous CPI-related drops originally in 2022. The brutal reaction was the result of a mismatch of expectations and uncertainty among investors, ahead of this week’s Federal Open Market Committee meeting. Analysts at Arcane Research believe that the cryptocurrency market is pricing in a significant hike in interest rates.

The odds are up for the September 21, 2022 Fed meeting

Raising the odds for the September 21, 2022 Fed meeting

Currently, the prediction is 75 bps and there is an 80% probability. However, investors are prepared for a potential 100 basis point rally, and this week’s decision is key to Bitcoin’s price direction. All the FOMC events have led to volatility in the price of Bitcoin and analysts are warning investors to prepare for a new explosion in Bitcoin volatility on September 21.

Bitcoin Volatility During FOMC Meetings

Bitcoin Volatility During FOMC Meetings

Bitcoin price tends to move in a highly correlated manner with the Nasdaq and S&P 500 indexes during major macro events such as the Federal Open Market Committee meetings.

Bitcoin trading strategy during FOMC statement, press conference

To help traders prepare for trades during the FOMC meeting, researchers presented a 60-minute volatility chart and concluded the effects of the FOMC statement and press conference on bitcoin volatility.

60-Minute Volatility: BTC During FOMC

60 Minute Volatility: BTC During FOMC

Active day traders are the most affected by the fluctuations caused by the Federal Open Market Committee (FOMC) in the price of Bitcoin. Therefore, conflicting interest rate hike expectations on September 21 warrant exceptionally high volatility. A 100 basis point rate hike is likely to have a negative short-term effect on the bitcoin price, and a lower 75 basis point hike will reflect positively.

Over the longer time frames, daily volatility is irrelevant, however, the Fed’s medium-term outlook and bullish cycle play a major role in determining the direction of bitcoin’s trend reversal.

BigCheds, a crypto analyst and trader, assessed the Bitcoin price trend and indicated that BTC needs to hold above $18,923. A drop below this price level indicates a reversal of the downtrend in the price of Bitcoin.

BTC-USD price chart

BTC-USD price chart



Source link

Leave a Comment