Bitcoin (BTC) is currently being closely watched by traders and investors in the lead up to the United States Federal Reserve’s decision on interest rates. As BTC approaches $30,000, some predict that a drop to below $20,000 could be on the cards, although traders remain divided over the course of action for the digital currency. While some anticipate a slow grind upwards with BTC at $28,700, others warn that the current trading range represents significant historical resistance, with a sudden drop to $20,000 resulting in a massive block of long liquidations.
On 22 March 2023, the Federal Open Market Committee (FOMC) met to decide on how to tweak baseline interest rates, amid ongoing concerns that the U.S banking crisis has disrupted policy. There are indications that the Fed may pause the cycle amidst fears that policy changes may have negative effects on risk assets. The failure of several banks has resulted in a rise in liquidity, undoing a chunk of the quantitative tightening that had previously taken place. Despite this, markets remain volatile as traders and investors remain uncertain over what results the Fed’s policy changes will bring.
Popular traders such as Crypto Tony are anticipating market volatility in response to the FOMC decision. Crypto Tony has warned traders to tread cautiously with BTC trending sideways until the meeting takes place. Despite this, many traders are hoping to take profit if BTC reaches $30,000. Meanwhile, markets commentator Tedtalksmacro has laid out potential scenarios for how the Fed policy changes could affect risk assets such as BTC.
BTC has created a “gap” on CME Group’s Bitcoin futures markets, where its prices have started a new trading week at a different position to that which it finished the previous week. Historically, spot prices have gone up or down in order to “fill” such gaps. A gap in focus was created in June 2022, and Michaël van de Poppe, founder and CEO of the trading firm Eight, referred to it as a’ CME gap,’ stating that this will be his primary focus as he expects it to sweep into a high around FOMC.
While some traders and analysts remain divided over the future direction of BTC’s price, many question whether it is wise to remain bullish at a time when the digital currency is at macro resistance with significant historical resistance. While there is potential for a breakout, some caution that the potential long liquidations sub $20k could be significant.
In conclusion, as BTC approaches $30,000, the Fed’s decision on interest rates is set to cause market volatility, as traders and investors remain cautious about the potential long liquidations and the potential risks associated with the significant historical resistance. It seems that many traders and investors are hoping that BTC will reach $30,000, but they remain uncertain over what the Fed policy changes will bring, and how it will affect BTC and risk assets in general.
