Bitcoin, altcoins and stocks rallied after the Fed launched another 0.75% interest rate hike, but is the current bullish momentum sustainable?
The price of Bitcoin saw a brief rally today, and a market-wide rally in cryptocurrency prices suggests that Bitcoin
BTC
dial down
$20,623
, Dogecoin
DOGE
dial down
for 0.12 US dollars
and ether
ETH
dial down
$1,581
could point to starting the month of November in the black.
The Federal Reserve’s Nov. 2 announcement of a 0.75 basis point interest rate hike initially had a positive impact on stocks and cryptocurrency markets, which saw marginal gains ahead of the Fed’s chairman’s comments. Fed Jerome Powell on future rate increases issued by Fed policy.
BTC briefly hit a daily high of $20,800 before retreating to the $20,500 range. While the current price fluctuates, BTC remains above the psychologically important $20,000 level.
BTC price. Source: Cointelegraph
Investors had expected a 0.75% rise and Powell and the Federal Open Market Committee (FOMC) hinted at further rate hikes, while mentioning the possibility of a pivot based on revised data. at the next meeting.
As Cointelegraph reported, in this scenario, Bitcoin and other cryptocurrencies like Ether and DOGE are likely to remain closely correlated to US stocks. Bitcoin bulls are already bracing for a post-FOMC gain and price jump to $640. million in BTC options expiring this November 4th.
Hand in hand with the growth of Bitcoin, most major cryptocurrencies including Ether, DOGE, Solana
SUN
dial down
$32
, Cardano
ADA
dial down
for 0.410 US dollars
, polygon
MATIC
dial down
$1.1320
, rib
XRP
dial down
for 0.47 US dollars
and throne
TRX
dial down
for 0.0626 US dollars
they posted green candles shortly after the rate hike announcement, but also pulled back. There are several reasons for the recent move.
Crypto market performance. Source: CoinMarketCap
The current rally in BTC and altcoins could indicate an increase in confidence in the market after some key developments.
Here are three reasons why the Bitcoin price rally retraced today and details of the main drivers of growth.
Bitcoin Open Interest Still Tipped Towards Short Traders
Since the price of Bitcoin fell to $17,600 on June 18, the open interest in BTC futures contracts has increased. Sharp price movements in the Bitcoin price could trigger another sell-off event, but whether the move would be higher or lower is difficult to determine.
Many traders agree that if the Fed changes to its current policy of quantitative easing and interest rate hikes, the price of BTC could rise and liquidate a significant portion of short-term interest on futures contracts.
The current price movement has triggered a wave of sell-offs and one data point to note is that there is a sharp reduction in aggregate open interest. Data shows that $704 million in cross-crypto shorts were liquidated on Oct. 25, helping Bitcoin push above $20,000.
Bitcoin options open interest. Source: Coinglass
Short liquidations immediately help boost the price of Bitcoin by forcing automated buying pressure. The current rally sees open interest gain momentum after remaining flat in October, which explains much of the sideways trading as well as the current rally.
Long-term data is in favor of Bitcoin, according to market analysts
Investor confidence in the crypto market could also increase due to their belief that the US Federal Reserve could raise interest rates in the next couple of months.
In the Fed statement, the possibility of a policy change remains open:
Achieve a monetary policy stance that is tight enough to bring inflation back to 2 percent over time. In determining the pace of future increases in the target area, the Committee will consider the cumulative stress of monetary policy, the extent to which monetary policy affects economic activity and inflation, and economic and financial developments.
According to Macromicro, a company that publishes investor consensus estimates of expected changes in interest rates, it shows that interest rates may be lower than previously forecast in
