With Bitcoin’s price exhibiting slow, low-volatility movement since the second half of August, it may find a catalyst in today’s FOMC meeting. Scheduled for 14:00 ET, the Federal Reserve will release a statement encompassing its economic projections and September’s rate decision.
Analysts expect the Federal Reserve to pause interest-rate increases for the second time this year due to a slowdown in inflation, although another rate hike remains possible by November.
The Federal Open Market Committee intends to maintain rates within the 5.25% to 5.5% range, holding steady at a 22-year peak.
Historically, Bitcoin’s price reacts during FOMC meetings, and while no rate change is expected, short-term volatility may ensue. With Bitcoin’s recent 10% recovery since September 11, the question arises: will this meeting erase those gains or propel Bitcoin even higher?
Bitcoin’s 30-day annualized volatility took a journey from 15% on August 13, steadily climbing to nearly 44% by September 15, and has since subsided to its current level of 35%.
The September high nearly mirrors the mid-July peak, indicating a consistent trend. Bitcoin’s volatility has been on a downtrend, largely influenced by its bearish market sentiment.
The preceding FOMC meetings were held on July 25-26 and June 13-14. The chart above illustrates the significance of these dates for Bitcoin’s volatility. Prior to June 13, Bitcoin was on an upward trajectory, which persisted after June 14.
Starting from July 14, when Bitcoin reached $31,840, the price embarked on a steep descent, ultimately bottoming out at $25,000 on September 11. There was a lone attempt to initiate an uptrend on August 29, but it was swiftly quashed.
The price has established a descending resistance level, originating from the July 14 high, and the current recovery phase is now testing this level.
Should the price face rejection at these levels, it may experience a downward breakout below $25,000, which represents its local support.
Conversely, if it breaks the resistance, we could anticipate an ascent toward $29,350, marked by the 0.618 Fibonacci level and a formidable resistance zone. It’s worth noting that we’re considering the downtrend from July 14 as the initial downward movement, and we’ve yet to witness a substantial corrective upswing.
While the rise since August 23 could potentially be a corrective move, it hasn’t fully compensated for the prior losses as much as one would expect in a correction. Consequently, an encounter with the 0.618 Fibonacci level appears increasingly likely at this juncture, implying a primarily upward breakout could be on the horizon.
Does this imply that any hawkish decisions by the Fed would initially boost Bitcoin before potentially driving it lower once more? This remains uncertain for now. As the meeting draws closer, we await market signals to gauge its potential impact.
In summary, the Bitcoin price may eventually decline further, but this volatile price behavior could persist for a while before a clear direction emerges.
Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.