December 8, 2022

Bitcoin [BTC] Traders found themselves in a painful situation this week after falling for the past seven days. The bearish performance led to the collapse of BTC and at press time, the crypto king stood in a critical territory on short-term support. And her attitudes from this point stood at the mercy of the Federal Open Market Committee meeting.

Bitcoin is sitting on its short-term support at $19,004 at press time. However, its performance over the next 24 hours will change significantly depending on the outcome of the FOMC meeting. It is expected that the Fed Fund rate will be adjusted in the US, and this will affect the sentiment of investors as it was in the past.

The current forecast favors a 0.5% or 0.75% increase. The latter would trigger a stronger bullish sentiment for BTC while the former would support range-bound performance. This was the case according to Schedule Which provides evidence or evaluates a likely outcome based on federal rate data.

Source: Twitter

Although the current sentiment was strongly supportive from 0.5% to 0.75%, a 1% rate hike may still be a possibility. The 1% rate is expected to spark bearish sentiment. However, the resulting downside could push BTC towards the $17,600 price range.

Moreover, on-chain metrics highlighted uncertainty as investors await the crucial FOMC decision. The dormancy scale indicated that dormancy decreased significantly in the last 30 days. At press time, it stood near monthly lows, which is not surprising since investors are waiting to see how the market will react.

Source: Glassnode

Dormancy reflects whale activity, especially around the middle of the month. Addresses with more than 1,000 BTC are down significantly as of September 15th. However, outflows from these addresses have also declined since September 18. This result reflected the uncertainty around the FOMC meeting and the impact of the announced price.

Source: Glassnode

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One possible outcome could be from another sharp rise or a slight decrease. Titles that are already sold out are more likely to benefit and start piling up especially if there is an additional downside. This result may provide a softer bearishness, and therefore a limited downside.

On the other hand, a positive result from the FOMC may lead to a strong buying signal especially by whales. This result may support a strong recovery towards the end of the week.

Thus, the results of the FOMC meeting will provide a rough idea of ​​how the Federal Reserve is doing in terms of fighting inflation. The positive outcome may ease selling pressure on Bitcoin and the riskier asset class in general.

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