Bitcoin [BTC] Traders have found themselves in a nail-biting situation this week after its rout over the past seven days. The bearish performance rattled BTC and at press time, the crypto king stood at a critical zone with a short-term support. From this point on its direction is at the mercy of FOMC meetings.
Bitcoin was sitting at short-term support with a price tag of $19,004 at press time. However, its performance will vary widely over the next 24 hours depending on the outcome of the FOMC meeting. A subsequent federal funds rate revision in the US is expected to influence investor sentiment as it has in the past.
Current estimates favor an increase of 0.5% or 0.75%. The latter will trigger a strong bullish sentiment for BTC while the former will support a range-bound performance. As was the case chart which provides a guideline or assesses potential outcomes based on federal rate data.
Source: Twitter
Although current sentiment favors a rate of 0.5% to 0.75%, a 1% rate hike may still be possible. A 1% rate is expected to trigger a bearish sentiment. However, the resulting crash could push BTC towards the $17,600 price range.
Furthermore, on-chain metrics highlighted an uncertainty as investors await the critical FOMC decision. The dormancy metric indicates that dormancy has decreased significantly over the last 30 days. At press time, it stood near its monthly low, which is surprising as investors wait to see how the market will react.
Source: Glassnode
Dormancy reflects whale activity especially from the middle of the month. Addresses holding more than 1,000 BTC have dropped significantly since September 15. However, outflows from these addresses have also declined since September 18. This result reflected uncertainty around the impact of the FOMC meeting and announced rates.
Source: Glassnode
Loading the gun
The possible result could be another sharp uptick or slight drop. An additional downside is the potential to take advantage of addresses that have already sold and start accumulating This result could potentially provide a softer landing, so a limited downside.
On the other hand, a favorable outcome from the FOMC could trigger a strong buying signal, especially by whales. Such results could support a strong recovery towards the end of the week.
Thus, the outcome of the FOMC meeting will provide a rough idea of how the Federal Reserve may be concerned about tackling inflation. A positive outcome could ease the selling pressure on bitcoin and the high-risk asset class in general.
