Bitcoin and major altcoins showed a correlation between macroeconomic indicators and virtual currency. All crypto assets fell after August’s CPI data releases. Data from the August CPI data release showed that cryptocurrencies’ prices had dropped due to fear, a rising inflation rate and an increase in their value.
Preparations for the FOMC meeting were already in place. Bitcoin has been under severe selling pressure before the meeting. The meeting’s outcome could have an impact on Bitcoin’s value, which investors seem afraid to fear.
Bitcoin’s Value Depends on Its Support
From last weekend, the BTC price has experienced a number of dramatic changes. Although the token was trying to maintain its grip on the $20,000 area, it experienced an ever-increasing downward pull. Bitcoin is now hovering around $19K, and gradually losing its value.
Data shows that the $19,000 mark is the average Bitcoin price over the past 50 months. The value was reported by the company as the key support level of the main cryptocurrency. BTC defends the value since 2015.
It would therefore be even more disastrous for the token if it failed to maintain the current support level. This means BTC investors are likely to experience greater pain and price correction.
MicroStrategy (MSTR) has purchased the dip with Bitcoin’s dropped value. Recenty, the software firm acquired 301 BTC.
Michael Saylor CEO at MSTR stated that $6 million was spent to purchase the tokens. The average price for each one is $19,851. This new move brings the firm’s total Bitcoin holdings to 130,000 BTC.
Potential Implications of FOMC Meeting
Following the FOMC meeting the Federal Reserve will reveal its interest rate increase. As a measure to curb rising inflation in America, this move is a precautionary one.
Fed’s hawkish attitude toward rising inflation has led to a more cautious approach. It may be tightening, however, as the CPI data are higher than what is expected to cause inflation.
Bitcoin’s price and other crypto assets are affected significantly by the Fed policy. The crypto market has seen a decline in prices, as many assets remain red.
If the Fed increases the interest rate by 75 bps, there could be some relief in crypto markets. The expected outcome will be met. The rate hike will result in severe market selling. This will happen because of the impending liquidity.
Pixabay featured image, Chart from TradingView.com