It has been a busy week for Bitcoin and all other cryptos in the market. It has been an exciting week of volatility across the market, from the CPI report through the conclusion of the Ethereum Merge. Even though this has been completed, there are still many big events to come. Like in the past it promises unpredicted movements for the cryptocurrency markets.
Be Prepared for Volatility in Bitcoin
There has always been volatility at the FOMC meeting, and not just in crypto markets. Bitcoin’s reaction to the FOMC meeting has also gotten more prominent with the increased correlation with the stock and macro markets. This means that any FOMC meeting will have an impact on crypto markets.
It is the same as Tuesday’s FOMC meeting. As the markets await the outcomes of the FOMC meetings, previous FOMC meeting times have seen volatility in this space. Due to this, Wednesday is predicted to see high levels of volatility during meetings hours. In particular, the peak volatility time is between 17:00 and 21:00 UTC. This coincides with previous meetings.
FOMC meeting: Expected volatility| Source: Arcane Research
Naturally, bitcoin’s price will respond to the equity indexes during this time and will tend to move in tandem with it. Investors should keep an eye out for the cryptocurrency market but it is also prudent to keep an eye open on macro markets.
Crypto: Crypto Swings High
Although bitcoin and other crypto currencies may react differently, wild swings can be expected. The volatility this time is due to uncertainty about the future rate hikes.
This shows the significance of FOMC meetings to various financial markets, and the increasing importance of crypto market as it grows. Currently, reports indicate that a 100bps rate increase is possible. Market participants have priced in 20% of the possibility for such a rise.
BTC stays below $20,000| Source: BTCUSD on TradingView.com
It is interesting that the FOMC meeting volatility doesn’t seem to persist beyond the conclusion of the meeting. Sometimes, volatility can last for a couple of hours longer, but it usually ends the following day when the volatility has settled down and normalized.
The volatility of this meeting doesn’t have much value over a long time. This meeting often serves as an indicator for traders about how to structure trades during that time. If rate hikes continue though, bitcoin’s price may break below $18,000 for the second time this year.
Featured image taken from Yahoo Money. Also charts from Arcane Research and TradingView.com.
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