Attention, Bitcoin traders! BTC’s next upswing may depend on this crucial factor 

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Bit­coin [BTC] traders have found them­selves in a nail-bit­ing sit­u­a­tion this week fol­low­ing its down­side in the last sev­en days. The bear­ish per­for­mance sent BTC crash­ing and at press time, the cryp­to king stood in a crit­i­cal zone on a short-term sup­port. Its direc­tion from this point stood at the mer­cy of the FOMC meeting.

Bit­coin sat on its short-term sup­port with a $19,004 price tag at press time. How­ev­er, its per­for­mance in the next 24 hours will have dras­ti­cal­ly changed depend­ing on the out­come of the FOMC meet­ing. The lat­ter is expect­ed to fea­ture a Fed­er­al Fund rate revi­sion in the U.S. This will impact investor sen­ti­ment as has been the case in the past.

Cur­rent pro­jec­tions favor a 0.5% or 0.75% increase. The lat­ter would trig­ger a stronger bull­ish sen­ti­ment for BTC while the for­mer would sup­port a range-bound per­for­mance. This was the case as per the chart which pro­vides a guide or assess­es the poten­tial out­come based on Fed­er­al rate data.

Source: Twit­ter

Although the cur­rent sen­ti­ment was heav­i­ly in favor of a 0.5% to 0.75% rate, a 1% rate hike could still be a pos­si­bil­i­ty. A 1% rate is expect­ed to trig­ger a bear­ish sen­ti­ment. How­ev­er, the result­ing down­side might push BTC towards the $17,600 price range.

Fur­ther­more, on-chain met­rics high­light­ed an uncer­tain­ty as investors await the crit­i­cal FOMC deci­sion. The dor­man­cy met­ric indi­cat­ed that dor­man­cy dropped sig­nif­i­cant­ly in the last 30 days. At press time, it stood near its month­ly lows, which is unsur­pris­ing since investors are wait­ing to see how the mar­ket will react.

Source: Glassnode

The dor­man­cy reflect­ed whale activ­i­ty espe­cial­ly from around mid-Month. Address­es hold­ing more than 1,000 BTC dropped sub­stan­tial­ly from 15 Sep­tem­ber. How­ev­er, out­flows from these address­es also tapered out since 18 Sep­tem­ber. This out­come mir­rored the uncer­tain­ty around the FOMC meet­ing and the impact of the announced rate.

Source: Glassnode

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The pos­si­ble out­come could be one of anoth­er sharp uptick or a slight drop. Address­es that have already been sell­ing are most like­ly to take advan­tage and start accu­mu­lat­ing espe­cial­ly if there will be an addi­tion­al down­side. This out­come could poten­tial­ly pro­vide a soft­er land­ing, hence a lim­it­ed downside.

On the oth­er hand, a favor­able out­come from the FOMC might trig­ger a strong buy sig­nal espe­cial­ly by the whales. Such an out­come may sup­port a strong recov­ery towards the end of the week.

Thus, the out­come of the FOMC meet­ing will pro­vide a rough idea of how the Fed­er­al Reserve has been doing as far as com­bat­ting infla­tion may be con­cerned. A pos­i­tive out­come might ease the sell pres­sure on Bit­coin and the high­er risk asset class in general.

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