With a potential range forming, Bitcoin is barely maintaining its position above $40,000, contributing to the uncertainty in the crypto markets despite the confidence of the so-called boomers.
This unease has been fueled by the recent US Consumer Price Index (CPI) data and the imminent decision of the Federal Open Market Committee (FOMC), leading to an escalation in BTC price volatility this week.
In line with market expectations, the CPI figures brought relief by revealing a decline in US inflation to 3.1%. This sets the stage for Federal Reserve Chair Jerome Powell to provide a summary of economic projections at the December 13 FOMC meeting.
Bitcoin Wavers Pre-Powell Report: Investor Apprehension
As the meeting approaches, Bitcoin’s price exhibits signs of weakness, indicating a sensitive market response to the anticipated insights from Powell regarding the economic landscape.
The recent trajectory of Bitcoin witnessed a notable downturn within the past 24 hours, marking a discernible drop in its price. However, this market movement wasn’t entirely unforeseen, as investors had been showcasing a heightened sense of skepticism in the week leading up to this particular event.
The market for bitcoin saw the sale of over 40,000 BTCs valued at approximately $1.6 billion during the previous week, increasing the exchange’s holdings from 1.05 million to 1.09 million bitcoins.
Retail investors accounted for the majority of this selling, and the unloading by whale addresses on Monday served as the tipping point for the price of Bitcoin, causing a correction.
Bitcoin Plunges 8%: Asian Sell-Off
Bitcoin’s price dropped by around 8% and momentarily approached $40,400. Asian traders also began the week with a bang, selling in large quantities, liquidating over $197 million in longs and $8.23 million in shorts.
Additionally, this decline erased $1.2 billion from open interest, which is now at $17.50 billion.
The world’s largest digital asset by market capitalization saw its price decrease, in contrast to early Wall Street trade that saw gains of 0.1% for the S&P 500, 0.2% for the Dow Jones Industrial Average, and 0.1% for the Nasdaq Composite.
There is a general assumption that the central bank will keep interest rates in the targeted range of 5.25 to 5.50% based on the current sentiments.
The FOMC’s recent actions, which decided to maintain unchanged interest rates in both the November and September meetings, provide context for this prediction.
Positions expressed at these conferences suggested that rates will probably remain constant for some time to come. The FOMC did, however, maintain its flexibility, indicating that it was willing to modify its stance in response to changing economic circumstances.
As Bitcoin treads on shaky ground, precariously holding just above the $40,000 mark ahead of the FOMC meeting, the cryptocurrency market finds itself at a critical juncture.
The uneasiness emanates from a confluence of factors, including increased volatility, skepticism among investors, and the looming influence of the FOMC’s impending decisions.
Featured image from Shutterstock
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