Bitcoin’s price movement has been limited to macroeconomic variables over the last days. The benchmark cryptocurrency was rejected north of $20,000 after “The Merge” and seems poised to face volatility over today’s trading session.
Bitcoin (BTC), which trades at $19,000. There has been sideways movement over the last 24hrs and a loss of 5% in the past week. As the market moves past “The Merge”, crypto has returned to its correlation with global markets and the most important factors driving the price action: inflation and interest rates.
How to Expect the Bitcoin Price To Rise Before The FOMC Meeting
Today’s meeting of the U.S. Federal Reserve is Federal Open Market Committee (FOMC). This FOMC meeting will see it announce its next interest rate increase. This major event is expected to cause volatility in crypto markets, just as it did in the previous month.
According to market participants, they expect another 75 basis point increase in the Consumer Price Index (CPI), and Non-Farm Payrolls metrics. These reports indicated that the U.S. dollar is experiencing persistent core inflation. according to trading desk QCP Capital.
The firm believes that the market will be looking at today’s interest rate hikes, the Fed’s plan for the future of its monetary policy, and its reaction to inflation. In that sense, today’s FOMC will be critical for market participants to have a deeper insight into the Fed’s strategy. According to the trading desk:
(…) we believe the focus will be on the Dot plot. The markets will be looking for clarity on how many hikes are expected for the next 3 FOMC meeting in 2022 and the latest terminal rates FOMC members have forecasted for next year.
Without “The Merge” acting as a bullish catalyzer, and with Ethereum trading under a “sell the news” setup, the Bitcoin price and crypto market have flipped to extreme fear levels. This is a common sentiment in all sectors of finance.
QCP Capital noted that Gold shows a high correlation between risk-on assets and Gold as shown below. With high inflation and the escalating conflict between Russia and Ukraine, Gold has not performed in circumstances that would have expected it to.
Is Bitcoin price set for a relief rally?
QCP Capital thinks that the Bitcoin market and its price could be rehabilitated. If the Fed keeps within market expectations and announces a 75-bps increase in the interest rate, cryptocurrency prices could rise.
According to trading firms, each FOMC meeting from 2022 led to a crypto relief rally. However, the current time appears to align with historic data. QCP Capital also added:
The question is how long it will continue. Is it a one-day squeeze, like May and June? Can we sustain positive momentum in Q4?