Bitcoin’s crab-like price movement continues as it moves sideways in shorter and longer time frames. The general sentiment in the market briefly turned bullish during today’s trade session, but BTC proceeded to return to its critical support area.
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At the time of writing, BTC’s price trades at $29,700 with a 7% loss in the last 24-hours. Bitcoin had previously been rejected at $32,000 above its current level and seemed to be headed towards the middle of its current levels.
First crypto market cap may react to negative price movements in traditional financial markets. As NewsBTC has been reporting, Bitcoin presents a high correlation with the S&P 500 and particularly higher with the Nasdaq 100 Index.
It was rejected at a crucial level. Since the beginning of 2022, the market has been trending downwards. This was due to the U.S. Federal Reserve and their Quantitative Tensioning (QT), program.
Contrary to Quantitative Equity (QE), where the FED purchases assets and increases its balance sheet, QT allows the financial institution to sell assets on global markets for $1.1 million every minute. analysisCoinBeast Media
This could lead to more downward pressure on global markets and the crypto industry. QT might not directly impact the industry, but it will play a key role in global liquidity, and investors’ risk tolerance, and will contribute to the conditions that could prevent Bitcoin from reclaiming new highs.
Over $8.5 trillion of assets are held by the FED on its balance sheets. CoinBeast explained that less than 1 trillion assets were sold by the FED when it began its QT.
It caused a stock market crash that lasted three weeks and saw a 22% drop over this period. Additional information was provided in the report
The overnight repo market saw a sudden dollar shortage, causing a financial crisis that began in Q4 2019. This forced Jerome Powell to famously end QT in September 2019 and spawned the infamous “Powell pivot.”
Bitcoin: Will history repeat itself?
The FED had to alter its actions due to macroeconomic conditions. The “Powell Pivot” was followed by a massive bull run in Bitcoin and stocks.
While macro conditions may be different today, they could still force the financial institution into a rethink of its strategy. The possibility of more price volatility, or worsening crab-like behavior in the future is possible.
Similar Reading| Bitcoin Is Still Tentatively Over $31,000, Bull Rally Or Trap
On the above, economist Jan Wüstenfeld said:
Considering the macro situation and quantitative tightening starting, I am not surprised by #bitcoin’s price move today. If you ignore these factors, then it is likely that your conclusions will be wrong.