Bitcoin records a 7% drop in the last week as yesterday’s Federal Open Market Committee (FOMC) hints at a more aggressive U.S. Federal Reserve. As investors reacted to a tougher monetary policy, selling pressure rejected BTC’s price from the mid area around its current levels.
At the time of writing, Bitcoin trades at $43,400 with a 3% loss in 24-hours and with potential to re-test more areas of support.
BTC trading in a range since the start of 2022 on the 4-hour chart. Source:
Investment firm Cumberland the FOMC minutes were directly responsible for the BTC’s bearish price action. Part of a “broader risk-off move”, the announcement affected several sectors across the macro markets.
Bitcoin’s recent weeks relief rally was triggered by the FED as well. Investors were expecting an increase in interest rates at around 25 bps. The financial institution announced this increase back in March meeting expectations.
This provided more clarity to market participants. However, the FED turned more aggressive on its approach as a result of a persistent inflation.
In that sense, the financial institution has forced market participants to adjust their views potentially shaking speculators from their positions. Cumberland said:
At this point, one has to wonder whether the Brainard/FOMC commentary which triggered this move represents new & meaningful information that should be factored into the market in the form of lower prices, or if instead this selloff is really just a classic case of weak hands rushing for the exits in a crowded trade.
The investment firm believes the second option is more likely. Therefore, they claimed the current downside price action could offer long-term traders with a buy the dip opportunity.
At these levels, as Bitcoin moves in a tight range between $48,000 and $37,000, without new macro-factors to oppose a rally, the market could offer a high reward/low risk scenario. The investment firm added:
(…) If we approach those lows in the absence of a fresh geopolitical catastrophe, risk/reward associated with adding more length seems attractive.
The Macro Outlook And Its Potential Impact On Bitcoin
A Senior Economist at Natixis, a global financial services company, claimed the FED has accelerated its monetary tightening. This could lead the institution to sell part of their balance sheet and keep the price of risk-on assets down.
3 shocks hitting Asia economies: a) Tightening of financial conditions, led by the Fed hike of both the price of the USD, leading to not just direct credit shocks but also relative & risk aversion or deleveraging b) China zero Covid (demand) c) Supply shocks
— Trinh (@Trinhnomics)
The U.S. FED announcement combined with a slowdown in China’s economy, the analyst claimed. The Asian giant has begun to tighten its monetary policy which indicates market participants could become more risk adverse and to an overall deleveraging.
However, this situation could become unsustainable in the short term and could force China to lose its monetary policy. The region currently faces economic weakness, the analyst said.
This could allow for risk-on asset like Bitcoin to reclaim previous highs. The analyst :
Let me put this another way, with external financial conditions tightening, led by the Fed tightening aggressively in May & more, the question is whether Asian economies can follow & if they can’t follow due to economic weakness, then there’s policy divergence & asset implications.
A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.
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