While the Fed puts markets on edge, the price of bitcoin manages to nudge up just before Wall Street opens. How will bitcoin react to FOMC news release?
$24,300 resistance “not a good sign”
Before the opening of Wall Street that day, information from Cointelegraph Markets Pro and TradingView supported a 24-hour high for BTC/USD.
The pair had fallen below $21,000 in the earlier part of the week, which increased traders’ anxiety since they were already on edge about potential U.S. Federal Reserve headwinds.
The Federal Open Markets Committee (FOMC) is expected to announce its next base rate increase on July 27; forecasts range in magnitude from 75 to 100 basis points, with the former being more likely. Both, however, are probably adverse for cryptocurrencies since they represent concerns about inflation and a propensity to push the economy closer to recession to control it.
“I will remain in my short while we are below the range high at $22,200,” popular analyst Crypto Tony summarized in part of his latest Twitter post on the day.
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“Reclaiming the range high would result in a long position being opened as long as we remain above.”
Others warned that even Bitcoin’s recent excursion to multi-week highs could not reverse the currency’s underlying negative trend, looking beyond the Fed event.
According to the on-chain tracking tool Whalemap, “Rejection for Bitcoin notwithstanding the absence of supply at $24k is not a positive indicator.”
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“Neither the on-chain volume profile nor the T.A. recognized this level as resistance, with the only indication of a potential rejection coming from the realized price bands.”
A chart of realized price by an address that breaks out the price at which various groupings of BTC last moved indicated that there was very little resistance at the $24,280 local peak for Bitcoin.
Data from analytics company Glassnode showed that at the time of writing, the aggregate realized price of Bitcoin was $21,800.
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A “one-off” rate hike
Meanwhile, trading company QCP Capital claimed that historical precedence was on the side of hodlers when discussing the probable impact of the Fed.
The staff projected that Fed Chair Jerome Powell would try to reassure the markets that future rate increases wouldn’t be this significant.
“The market has responded favorably to the FOMC’s rate decisions immediately after each meeting this year. The same is anticipated for this one. “In their most recent market update, which was distributed to Telegram channel users.
In addition, Powell is likely to say that this 75-bps increase is an exception and that the Fed will soon return to its previous 50-bps policy due to slowing growth and rising inflation (with commodity prices falling across the board). The markets will respond favorably to this.
That does not imply that the rating announcement would not cause some market anxiety, though.
Every FOMC this year has been a letdown from the volatility standpoint, and the front-end implied [volatility] immediately dropped after.
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“Markets have been much more sensitive to data releases than FOMC. As a result, realized volatility has been consistently higher post-CPI than post-FOMC.”
QCP referred to recent Consumer Price Index (CPI) monthly prints, which are a kind of U.S. inflation statistics.
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