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FOMC versus BTC price ‘local bottom’ — 5 things to know in Bitcoin this week

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Bitcoin (BTC) starts the new week with optimism as traders greet the first green weekly candle in over a month.

BTC price strength appears to be gradually improving after a weak August and start of September, with BTC/USD climbing toward $27,000.

A solid weekly close provides the backdrop to what promises to be an interesting few days, which will include a key United States macroeconomic event as a potential volatility driver.

The U.S. Federal Reserve will meet to decide on interest rate policy, and any surprises could have significant repercussions for risk assets, including crypto.

Elsewhere, things are looking promising for Bitcoin, with network fundamentals set to surge higher to new records.

Strength “under the hood” is similarly being reflected in hodler behavior, with wallet numbers continuing to shoot higher regardless of BTC price action.

Cointelegraph takes a look at these topics and more as Bitcoin begins what is likely its most eagerly-awaited week of September.

Trader eyes BTC price “local bottom”

Bitcoin offered little volatility over the weekend, but calmer trading conditions are already being challenged into the new week, data from Cointelegraph Markets Pro and TradingView shows.

The Sept. 17 weekly close soon gave way to upside volatility, and at the time of writing, bulls are attempting to build on that foundation to crack new month-to-date highs.

BTC/USD 1-hour chart. Source: TradingView

Popular trader Credible Crypto thus suggested that the weekend zone could well form a “local bottom.”

“This region continues to be defended, with buyers stepping in here once again. Has the makings of a local bottom/base being formed imo,” he told X (formerly Twitter) subscribers overnight, alongside a chart of order book liquidity on the largest global exchange, Binance.

“I think we probs push back up to 27k+ soon.”

BTC/USD order book data for Binance annotated chart. Source: Credible Crypto/X

A prior post noted the lack of promise in shorting at weekend levels, with bid liquidity improving.

The weekly close meanwhile excited Michaël van de Poppe, founder and CEO of trading firm Eight, who saw key support holding at the 200-week exponential moving average (EMA).

“Bitcoin is closing above the 200-Week EMA, which is vital for bullish continuation,” he explained.

“Next week we should continue to do so and price starts to look similar to the 2015/2016 cycle.”

Van de Poppe uploaded a chart showing the interplay between the spot price and the 200-week EMA, currently at $25,700, since 2020.

“Markets are consolidating with a weekly close strongly above the 200-Week EMA for Bitcoin. The chances of the correction to be finished are increasing day by day,” he added in a separate post.

BTC/USD annotated chart. Source: Michaël van de Poppe/X

Some are staying sober on the outlook for Bitcoin into 2024. Among them is popular trader and analyst Rekt Capital, who continues to eye the potential for a bearish double-top pattern to play out on weekly timeframes.

“Make no mistake – Bitcoin is in an early stage Bull Market,” he wrote in part of weekend X analysis.

“Long-term the outlook is bullish. Mid-term? Over the next 7 months, we may or may not get 1 last major correction. Will it happen? It would be wise to at least be ready for it if it does.”

BTC/USD annotated chart. Source: Rekt Capital/X

FOMC volatility due with rate pause odds at 99%

This week, the word on everyone’s lips is FOMC — the Federal Open Market Committee — which will meet to decide on interest rates going forward.

If history is a guide, the Sept. 20 decision will induce at least some form of volatility across risk assets, with Bitcoin and crypto no exception.

The landscape surrounding the latest FOMC meeting is mixed, with last week’s macro data showing inflation beating expectations, yet markets overwhelmingly believe that the Fed will not raise rates further to combat it.

According to CME Group’s FedWatch Tool, the odds of rates remaining unchanged are almost unanimous.

Fed target rate probabilities chart. Source: CME Group

This could reduce the impact of the FOMC event, but conversely, a curveball decision that goes against market appraisals would be felt all the more keenly.

“This week sets up the rest of 2023,” financial commentary resource The Kobeissi Letter summarized while highlighting upcoming macro data releases and more.

“Fed guidance on Wednesday sets the tone for the next few meetings. Expect to see lots of volatility this week.”

Explaining the likely outcome of FOMC, crypto and macro insight resource Ecoinometrics suggested that the market odds were no surprise based on Fed signals.

“There will be no rate hike at the FOMC meeting on September 20. That’s what the Fed Funds futures are pricing,” it wrote at the weekend.

“And actually they have been very consistent about that for a long time now. The fact that the latest inflation numbers aren’t exactly going in the right direction didn’t change anything to that.”

Fed funds futures annotated chart. Source: Ecoinometrics/X

An accompanying chart added that the market “never had doubts” about what would happen in September.

Difficulty, hash rate return to new records

Back to Bitcoin and a return to the “up only”…

Read More: FOMC versus BTC price ‘local bottom’ — 5 things to know in Bitcoin this week

2023-09-18 08:59:28

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