Unpacking the Bitcoin Volatility Triggered by the FOMC
The FOMC meeting held on Wednesday, September 21, triggered massive volatility for bitcoin and other cryptocurrencies. This volatility was expected and followed the previous trends like clockwork. However, it leaves a lot to be desired in the way it played out and sets a precedent for the crypto market, especially during the bear run.
Bitcoin volatility is nerve wracking
The FOMC meeting had been held on Wednesday, and the volatility trend had followed almost identically to the way it was expected to go. Around 18:00 UTC, the market had seen most of this volatility. Bitcoin’s price had fallen in value by more than $1,000 during this time. However, this would only last for a short time because the price of the digital asset was back around three hours later. Nevertheless, the crypto market would feel the impact of this volatility even after the FOMC meeting was completed.
The rally after the crash had brought the price of bitcoin back close to where it was before the crash, but the momentum had taken a hit, causing the price to fail to hold a critical level. When bitcoin’s price fell below $19,000 after this, it cemented the digital asset on another bearish trend.
BTC fails to hold $19,000 | Source: BTCUSD on TradingView.com
Now, bitcoin is about $2,000 below its 50-day moving average. This has triggered the sale of the digital asset during this time. Support for BTC remains at just above $18,500, putting the digital asset in a precarious position despite currently trading above $19,000.
Market sentiment is shaken by the Fed
Despite the significant levels of volatility that the digital asset had experienced in the market, investors seemed to be ready for it, as evidenced by the market sentiment of the last day. Before the meeting was held on Wednesday, the Crypto Fear & Greed index had been trending at a price of 23, placing it in extreme fear territory.
Sentiment remains in extreme fear | Source: alternative.me
However, where market sentiment will usually remain in such situations, it continued to hold steady, losing only a single point during this time. The Fear & Greed index currently puts crypto market sentiment at a score of 22. This is still in the extreme fear zone, showing a lot of caution in investing in the market, but it also shows that investors were averse to market volatility.
The good news is that although bitcoin’s price is still down, the market has started to stabilize. So while there have been significant losses in the market over the past day, it is now leveling off in a way that gives investors time to reassess their positions and plan accordingly.
Featured image from IONOS, chart from TradingView.com
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