Bitcoin (BTC), which attempted to recover losses on July 27, when a macro day for risk assets arrived, was called Bitcoin Day of Recounting.
BTC/USD 1-hour candle charts (Bitstamp). Source: TradingView
Nalysis: $24,300 Resistance “not a good signal”
TradingView and Cointelegraph Markets Pro data confirmed that BTC/USD reached a 24-hour high prior to Wall Street opening.
The pair was below $21,000 for the first part of the week. This increased nervousness among traders who are already aware of possible headwinds from US Federal Reserve.
Likely chop for equities going into FOMC which expected $BTC and crypto chop around also today pic.twitter.com/GDj0GwlDXy
— Rager (@Rager), July 26, 2022
July 27th will see the Federal Open Markets Committee (FOMC), announce its next base rate increase. Expectations range between 75 and 100 basis point in size, but favor the former. Both are likely to be unfavorable to crypto because they reflect both inflation concerns and the willingness to bring it closer to recession.
Crypto Tony, a popular analyst summarized his thoughts in a part of his most recent Twitter post.
“Reclaiming the range high will result in a long place being opened as long we remain above.”
Others saw beyond the Fed event and warned that Bitcoin’s recent rise to multi-week highs did not change its overall bearish trend.
Whalemap, an on-chain monitoring resource, concluded that “Rejection for Bitcoin despite a lack of supply at $24k” was not a good sign.
“Neither TA or on-chain volume profiles saw this level of resistance, with realised price band being the only indication of a possible rejection.”
A chart showing realized price by address — a breakdown at which price different groups of BTC have moved in the past — was shown to illustrate the relative lack of resistance at Bitcoin’s $24,280 local peak.
According to data from analytics firm Glassnode, Bitcoin’s realized price was $21,800 at the time this article was written.
Annotated chart of the Bitcoin realized price. Source: Whalemap/Twitter
Hike at a “one-off” price
QCP Capital, a trading firm, said that the historical precedent was actually on the side for hodlers when discussing the Fed’s potential impact.
Related: Can the Fed stop Bitcoin price from reaching $28K at $28K? Here are 5 things you need to know about Bitcoin this week
Staff predicted that Fed Chair Jerome Powell would try to reassure the markets that future rate increases would not be so drastic.
“Every FOMC meeting this season has seen a positive market reaction to rate decisions. “We expect the same for that one,” they stated in their most recent market update, which was sent to Telegram channel subscribers.
“There is also a chance Powell will signal that the 75 bps increase is temporary and that the Fed will revert to 50 bps due to slowing growth and inflation ease up (with commodity price falling across the board). This will be a positive reaction from the markets.
However, this does not mean that the rate announcement will be free from market jitters.
QCP stated that “From a volatility perspective every FOMC this Year has been a disappointment with front end implied [volatility] dropping very hard right after,” QCP said.
“Markets are more sensitive than FOMC to data releases.” Realized volatility has been consistent higher post-CPI than after FOMC.
QCP refers to the most recent U.S. inflation data releases, in the form the Consumer Price Index (CPI), monthly prints.
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