Concerns that Bitcoin has already surged come as volatility is expected around the Fed’s rate hike decision and comments.
kicks off a key week of macroeconomic and domestic events that are still trading above $20,000.
After its highest weekly close since mid-September, the BTC/USD pair remains tied to higher levels in a macro trading range.
The bulls were eager to break the trend entirely, while warnings from more conservative market participants continued to call for macro lows to enter next.
Until now, a tug-of-war between the two parties is what has characterized BTC price action, and any internal or external triggers only have a temporary effect. What could change that?
The first week of November contains a key event that has the potential to shape future price action: a decision by the US Federal Reserve on interest rate hikes.
In addition to other macroeconomic data, this will form the backdrop for the general market sentiment on cryptocurrencies.
Bitcoin will continue to see a monthly close through the week, which could hit last-minute volatility despite October 2022 being one of the calmest on record.
Cointelegraph takes a look at these and several other factors that will affect BTC/USD in the coming days.
FOMC countdown enters the final days
The main story of the week comes with the Fed and its Federal Open Market Committee (FOMC) meeting.
On November 1-2, officials will make a decision on the November benchmark interest rate hike, priced at an overwhelming 0.75%.
While this coincides with the Fed’s previous two hikes in September and July, respectively, markets will be watching for something else: subtle signs of a change in QT.
The rate decision is due Wednesday at 2:00 p.m. m. EST, along with an accompanying statement and economic projections.
Fed Chairman Jerome Powell will then deliver a speech at 2:30 p.m. m. EST, setting the stage for market reactions.
As Cointelegraph reported, there is already talk that subsequent rate hikes will start the neutral trend, marking the end of an aggressive policy that was introduced nearly a year ago.
For Bitcoin and risk assets in general, this could ultimately provide important fuel for growth as conditions ease.
However, looking short-term, commentators expect a standard reaction to the next FOMC announcement.
“I think we’re going to see a bit of a pullback this week, which is pretty typical when the Fed announces rates,” the popular IncomeSharks trading account summarized on Twitter followers:
“4h shows double top and downtrend break.”
An accompanying chart showed that the expected pullback would be followed by more upside potential ahead.
BTC/USD annotated chart. Source: IncomeSharks/Twitter
An alternative perspective came from analyst Kevin Svenson this weekend, who warned that with inflation expectations “rising”, there was little reason to expect an interest rate hike in the near future.
“Every time the stock market has rallied in this current downtrend, it has done so in anticipation of a Fed swing,” he noted:
“Inflation expectations are rising recently, a Fed pivot is less likely. Is trending your friend? If so, stocks will find another post FOMC bottom.
Svenson went on to say that if the Fed surprises with a rate hike of less than 0.75%, the bullish momentum should “take over.”
“Of course, this could be wrong if the Fed does a ‘soft turn’ and goes for 50 basis points,” he added:
“If that happens, 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 sub-0.75% rise are currently 19%.
Fed Interest Rate Probabilities Table. Source: CME Group
Meanwhile, in a summary of the FOMC event, popular analyst Tedtalksmacro drew parallels with Svenson’s view.
“There’s a lot of talk about a ‘pivot’ or ‘the Fed is breaking things and needs to stop going higher.’ But the data says otherwise and points to nothing more than a hard line again this week,” he said.
“Clear Double Up” Sparks Discussion About BTC Downside
Bitcoin managed to avoid major volatility by closing the weekly candle around $20,625 on Bitstamp, data from Cointelegraph Markets Pro and TradingView confirmed.
that in itself