Bitcoin’s price surged after the Federal Reserve announced a rate hike that was less significant than those seen in previous sessions but still indicated that continuous hikes may be warranted. However, the king currency was dragged lower as the dollar rallied as risk aversion returned, leaving investor sentiment relatively bearish.
On Wednesday, the Federal Reserve raised interest rates by 0.5% to a range between 4.25% and 4.5%.
This move was in line with Wall Street’s expectations. According to reports, members of the Federal Open Market Committee do not expect a switch from rate hikes to rate cuts until 2024.
Bitcoin is now trading in a bearish direction, although it just broke a key resistance level around $18,150. However, the price of bitcoin plunged below $18,000 after the Fed announced it would be raising interest rates.
This points to the possibility that the current selling pattern will continue. BTC is trading at $17,708 at the time of writing, down about 1% over the past 24 hours.
What on-chain data suggests?
According to on-chain data, the measure “Bitcoin (BTC) Spent Output Value Bands: All Exchanges” suggests that the amount of whale deposits on cryptocurrency exchanges is decreasing.
Typically, the development of the Bitcoin market bottom is caused by whales selling their BTC holdings by transferring them to cryptocurrency exchanges.
After a year-long bear market that saw huge selling by whales and miners, Bitcoin is now starting an accumulation cycle ahead of the next halving.
In fact, institutional investors are expected to buy the downturn discreetly, similar to the accumulation cycle that took place in 2019-2020.
Cryptoquant’s analysis says:
“In terms of spending, the continued high level of whale spending is at odds with a sign that could lead to a change in the market cycle. A sustained upward price trend is typically accompanied by whales holding their bitcoins.”
In a related development, according to the results of a survey by a reputable crypto analytics platform, despite the fact that 2018 was a difficult year for the majority of the cryptocurrency market, there seems to be no shortage of believers who would expect 2023 to offer a chance for recovery.
Cryptocurrency monitoring site CoinMarketCap is now conducting a year-end closing survey. Respondents were asked to cast their votes according to whether they expected the next year to be bullish or bearish, and more than eighty percent of respondents voted bullish.
Is now a good time to buy?
Bitcoin traded in a tight range between $18,500 and $20,000 between September and October. However, following the stunning collapse of crypto exchange FTX, Bitcoin temporarily plummeted 26%.
For anyone wondering if this is a good time to buy Bitcoin, I would not recommend it. The overall macroeconomics for Bitcoin is unfavorable. The on-chain/flow numbers for bitcoin are quite bearish.
So if you have a two to four week time horizon, be sure that now is not the best time to buy Bitcoin. Unless you’re aiming for long-term profit.
As such, you can buy and then be ready to stick around for months on end when ideally the situation would have improved a lot.
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