Bitcoin (BTC) begins a key week of internal and macroeconomic events still trading above $20,000.After its highest weekly close since mid-September, B
Bitcoin (BTC) begins a key week of internal and macroeconomic events still trading above $20,000.
After its highest weekly close since mid-September, BTC/USD remains tied to higher levels within a macro trading range.
Bulls have been keen to shift the trend entirely, while warnings from more conservative market participants continue to call for macro lows to enter next.
So far, a tug-of-war between the two parties is what has characterized BTC price action, and any internal or external triggers have only had a temporary effect. What could change that?
The first week of November contains a key event which has the potential to shape price behavior going forward — a decision by the United States Federal Reserve on interest rate hikes.
In addition to other macroeconomic data, this will form the backdrop to overall market sentiment beyond crypto.
Bitcoin will further see a monthly close during the week, this apt to spark last-minute volatility despite October 2022 being one of the quietest on record.
Cointelegraph takes a look at these and several other factors impacting BTC/USD in the coming days.
FOMC countdown enters final days
The headline story of the week comes courtesy of the Fed and the meeting of its Federal Open Market Committee (FOMC).
On Nov. 1-2, officials will make a decision on the November benchmark interest rate hike, this overwhelmingly priced in at 0.75%.
While this will match the Fed’s previous two hikes in September and July, respectively, markets will be watching for something else — subtle hints of a change in quantitative tightening (QT).
The rates decision is due Wednesday at 2pm Eastern time, along with an accompanying statement and economic projections.
Fed Chair Jerome Powell will then deliver a speech at 2:30pm, this completing the backdrop to market reactions.
As Cointelegraph reported, there is already talk that subsequent rate hikes will begin to trend towards neutral, marking the end of an aggressive policy enacted almost a year ago.
For Bitcoin and risk assets in general, this could ultimately provide some serious fuel for growth as conditions loosen.
Looking at the short term, however, commentators expect a standard reaction to the upcoming FOMC announcement.
“Think we see a little pullback this week which is pretty typical when the FED will be announcing rates,” popular trading account IncomeSharks summarized to Twitter followers.
“4h showing a double top and downtrend break.”
An accompanying chart showed the expected retracement to be followed by more potential upside going forward.
An alternative perspective came from analyst Kevin Svenson this weekend, who warned that with inflation expectations “increasing,” there was little reason to hope for a rate hike decrease in the near future.
“Every time the Stock Market rallied up in this current downtrend, it did so with the expectation of a FED pivot,” he noted.
“Inflation expectations increasing recently making a FED pivot less likely. The trend is ur friend? If so, Stocks find another lower high after FOMC.”
Svenson continued that should the Fed surprise with a lower hike than 0.75%, bullish momentum should “take over.”
“Obviously, this could be wrong if the FED does a “soft pivot” and goes for 50 basis points,” he added.
“If that occurs, the market would get excited and bullish speculation would take over for the time being.”
According to CME Group’s FedWatch Tool, the chances of a lower hike than 0.75% are currently 19%.
In a summary of the FOMC event, popular analyst @Tedtalksmacro meanwhile drew similarities with Svenson’s take.
“There’s lots of talk about a ‘pivot’ or that ‘the Fed are breaking things and need to stop hiking.’ But, the data says otherwise and points to nothing other than hawkishness again this week,” it said.
“Clear double top” sparks BTC downside talk
Bitcoin managed to avoid major volatility as it closed the weekly candle at around $20,625 on Bitstamp, data from Cointelegraph Markets Pro and TradingView confirms.
That in itself was noteworthy, marking the highest weekly candle close in six weeks for BTC/USD.
The daily chart meanwhile retains the 100-day moving average as current resistance.
Nonetheless, the long-established trading range the pair has acted in for months on end remains firmly in place, and even last week’s push higher failed to produce a significant paradigm shift.
For analyst Mark Cullen, it is thus a question of “wait and see” when it comes to Bitcoin’s next move.
In fresh analysis on Oct. 31, he noted BTC/USD had returned to a familiar Fibonacci level based on last week’s upside while continuing to range.
“Bitcoin pulled back to the 20.4k level at the 61.8 of the last push up & has held it so far,” he…
cointelegraph.com