Bitcoin [BTC] Traders have found themselves in a nerve-wracking situation this week after heading lower for the past seven days. The bearish performance sent BTC plummeting and at press time, the crypto king was in a critical zone of near-term support. Its direction from that point was at the mercy of the FOMC meeting.
Bitcoin was betting on its short-term support at press time, priced at $19,004. However, its performance will have changed drastically over the next 24 hours depending on the outcome of the FOMC meeting. The latter is expected to be accompanied by a revision of the federal fund rate in the US. As in the past, this will affect investor sentiment.
Current forecasts assume an increase of 0.5% or 0.75%. The latter would trigger stronger bullish sentiment for BTC, while the former would support range-bound performance. This was the case according to the chart, which offers a guide or assesses the potential outcome based on federal interest rate data.
Source: Twitter
Although current sentiment is strongly in favor of a 0.5% to 0.75% rate, a 1% rate hike could still be a possibility. A 1% interest rate is expected to trigger bearish sentiment. However, the resulting downside could propel BTC towards the $17,600 price range.
Additionally, on-chain metrics highlighted uncertainty as investors await the critical FOMC decision. The rest metric showed that rest dropped significantly over the past 30 days. At press time, it was near its monthly lows, which is not surprising as investors wait and see how the market will react.
Source: Glassnode
The rest period reflected whale activity, particularly from the middle of the month. Addresses with more than 1,000 BTC dropped significantly starting September 15. However, since September 18, outflows from these addresses have also stagnated. This result reflected the uncertainty surrounding the FOMC meeting and the impact of the announced interest rate.
Source: Glassnode
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The possible outcome could be another sharp rise or a slight fall. Addresses that have already been sold will most likely benefit and accumulate, especially if there is an additional downside. This result could potentially result in a softer landing, hence a limited downside.
On the other hand, a favorable FOMC result could trigger a strong buy signal, particularly from whales. Such a result could support a strong recovery towards the end of the week.
Thus, the outcome of the FOMC meeting will give a rough idea of how the Federal Reserve has been behaving in terms of fighting inflation. A positive result could ease selling pressure on Bitcoin and the riskier asset class in general.
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