Bitcoin’s price remains stable at the current level, with bullish sentiment fading over shorter periods. The crypto market’s recent sideways price actions seem related to the upcoming macroeconomic events and their potential influence across global markets.
Bitcoin trades at $20,000. The price has experienced sideways movements in the last 24hrs and an average 6% gain over the previous week. BTC’s strength is being shown by other cryptocurrencies that are in the top 10, according to market capitalization. Dogecoin, Ethereum, and Solana (SOL) lead this list.
Bitcoin price in the short term, risk of spikes in volatility
Macroeconomic factors are heavily influencing the Bitcoin price. Federal Reserve of the United States (Fed), is working to reduce inflation through tightening monetary policy and increasing interest rates.
Bitcoin and risk-on asset have slowed to the downside in 2022. Due to economic uncertainty, BTC had a stronger correlation in October with traditional assets.
Arcane Research has reported that this trend is expected to persist. According to the research company, Bitcoin’s mid-term price will continue to suffer from high correlation with macroeconomic factors.
Fed Chairman Jerome Powell will be under immense pressure to shift its monetary policies away from American external and internal agents. The Bitcoin price is likely to benefit from Powell’s concession and will continue its bullish momentum.
Arcane Research thinks it more likely that Powell will continue on his current course and prepare markets for future interest rate increases. The leaders of the financial institution want to decrease inflation in U.S. dollars regardless of any fallout from global markets.
During tomorrow’s Federal Open Market Committee (FOMC) meeting, Powell might offer more clues. Market participants expect more hikes. However, any indication of dovishness may trigger another upward move.
Bitcoin Market Is Easily Squeezed
Arcane Research has identified two potential factors to support an upward trend. First, high leverage in the cryptocurrency market.
As the Bitcoin price rises, short positions will continue to grow. If the market goes long, these positions will be fuel for Bitcoin.
In addition, tomorrow’s FOMC meeting will likely trigger volatility which might lead Bitcoin to squeeze out these short positions and reclaim previously lost territory. Arcane Research observed that volatility at these events has been historically high.
The same holds true for this trade’s short-side. If markets react too quickly to more tightening or expect the Fed’s dovishness, cryptocurrency might suffer, and it could fall to $18,600 at the bottom. Arcane Research noted:
Be prepared for volatile markets early November. The event calendar in the first two-thirds of November is extremely busy. Tomorrow will be the first.