Bitcoin Price Starts The Week In The Red, What Led To The Crash?
Bitcoin price has moved sideways as October marches on, and the cryptocurrency is experiencing downside volatility. On low time frames, the sentiment in the market is neutral with gains towards the bullish side, but on higher time frames, BTC has been stuck in the same area for several months.
At the time of writing, the Bitcoin price is trading at $19,150 with a loss of 2% in the last 24 hours and sideways movement in the last 7 days. BTC’s price remains range bound at its current levels and with the occasional re-test of $20,500 resistance due to macroeconomic conditions.
Bitcoin price is seeing an increase in volatility
Bitcoin price recently rejected from the $20,500 range as the US economy registers higher than expected employment levels and resilience to Federal Reserve (Fed) monetary policy. The financial institution took over the attention of the financial sector.
The current economic narrative revolves around the same themes, how far is the Fed willing to go to curb inflation and take the markets down with it? And how much pain can the US allies take before the financial institution swings?
From this main narrative, there are various subplots with a potential economic recession taking center stage. In the crypto sector, there are players who already expect the Bitcoin price to rise as central banks maintain their aggressive approach and increase the chances of disrupting key components of the global economy.
In this sense, the upcoming meeting of the Fed Federal Open Market Committee (FOMC) this Wednesday may provide more insight into the institution’s strategy. This event is likely driven by the Bitcoin price’s increase in volatility.
In the past, the cryptocurrency has seen similar price action ahead of the event, and bullish price action in the days following. This time, the US dollar, as measured by the DXY index, could act as a short-term headwind against the cryptocurrency.
On daily time frames, the DXY was able to score a new monthly high for October as the currency continues its uptrend. At the time of writing, the dollar appears poised to revisit the 115 area, which could limit upside potential for the Bitcoin price, and three key global currencies: the Japanese yen, the euro and the British pound.
When Will The Fed Pivot?
In the short term, the Bitcoin price needs to see a rebound in the US dollar to mitigate the downside pressure. As long as the dollar remains strong, exposure to assets and global currencies is likely to trade in the red.
Pressure is already mounting on the Fed to halt its monetary policy and rate hike program. From international bodies to hedge funds, the global market is begging for mercy, but the Fed and its chairman Jerome Powell seem unmoved.
Despite the UN’s call for the Fed to stop increases, J. Powell seems determined to tame inflation – without other goals. This attitude combined with concerns about recessionary thoughts has driven stocks down to near oversold levels.
7/n
— AndreasStenoLarsen (@AndreasSteno) 10 October 2022
On Wednesday, if the Fed reiterates its position, the Bitcoin price could continue to see downside volatility. In this scenario, traders should watch key support levels at $18,600 and $17,600 to prevent a bigger withdrawal.
