Bitcoin (BTC) is facing another week of “huge” macro announcements after its lowest weekly close since July.
After days of losses following the latest inflation data from the US, BTC/USD, like altcoins and risk assets more broadly, has failed to recover.
The biggest cryptocurrency has yet to turn $20,000 into convincing support, and with the start of the third full week of September, the risk is once again that this level could act as resistance.
The bulls have a lot to worry about – the coming days will see the Federal Reserve’s decision on the next major rate hike, something that will affect the market beyond just sentiment.
In addition, the effects of the Ethereum (ETH) merger continue to emerge, while the dissolved exchange Mt. Gox, payments to creditors are adding another potential cloud to the Bitcoin price landscape.
Cointelegraph takes a look at five potential market-moving factors to keep an eye on Bitcoin over the next week.
Fed focus on ‘Hammer’ rate hike
The main event of the week comes in the form of the Federal Reserve’s decision on key interest rates.
After the August CPI print came out “hotter” than expected, the Fed will be under pressure to respond.
As such, the market has now priced the entire fed funds rate hike at a minimum of 75 basis points, not ruling out the chances of 100 basis points, according to the CME FedWatch Tool as of September 19.
The 100-point increase would be the Fed’s first such action since the early 1980s.
Federal Target Rate Probability Chart as of September 19, 2022. Source: CME Group
The FOMC is due to meet on September 20-21, and will publish a statement confirming the rally and the Fed’s support for the figure in question.
Mike McGlone, chief commodity strategist at Bloomberg Intelligence, said in an interview report with Kitco over the weekend.
He said the growth of risky assets since the March 2020 crash “has swung a lot to one side,” and it was now “very clear” that the reversal would take hold.
Cryptocurrency will appear in a general market reset, and Bitcoin will eventually come out, McGlone continued, repeating a long-standing theory about the future of the cryptocurrency. Gold will also outperform, but for both, the pain should come first.
He summarized, “Unfortunately, for the Fed to stop this heavy hammer, risky assets must make it stop by tightening it.”
A move of 100 basis points this week should speed up the process, which is now seeing stimulus from central banks outside the US after initially slow to raise interest rates to combat inflation.
Meanwhile, the popular Twitter analytics account Games of Trades said it was a tough time for the S&P 500 before Wall Street started trading.
“In times like these, with great uncertainty across the board, the cryptocurrency market won’t do much without stock permission,” added analyst and commentator Kevin Svenson.
Spot price falls after weak weekly close
The last week saw the Bitcoin tailwind build up, dragging the Bitcoin price movement down in kind.
BTC/USD lost more than $2,000 in a single weekly candle, and closed below $20,000 at its lowest close since July, according to data from Cointelegraph Markets Pro and TradingView.
BTC/USD 1-week candle chart (Bitstamp). Source: TradingView
The close was followed by a sharp decline in which the pair fell below $19,000.
BTC/USD 1-hour candlestick chart (Bitstamp). Source: TradingView
The bearish mood is perhaps understandable – the Ethereum consolidation has become a “selling news” event, along with the macro catalysts that have contributed to a new flight of risky assets.
Now, analysts are considering the chances of the downtrend remaining in place at least until the passage of the Fed rate announcement.
“BTC has been pulling back over the weekend, but there is always the possibility of some volatility before the close,” the source of the analysis on the Material Indicators chain told Twitter followers in a post on September 18.
“Massive economic announcements and federal announcements next week will make things more exciting again.”
The accompanying chart shows the state of play in Binance’s order book, with support at around $19,800 since the failure to sustain price action.
The day before, Material Indicators concluded that there was also little point in imagining that a deeper decline would be avoided. Judging from the order book, bidding procedures were not strong enough to support current levels.
Given when a macro bottom could occur, meanwhile, popular trader Cheds bet on the fourth quarter of this year, calling bitcoin “on track” to do so.
In another tweet at the weekly close, he added: “BTC in Weekly Dollars is starting to pressure the lower levels of the range.”
Short positions were piling up at the time of writing on both Binance and FTX, indicating a concerted effort to drive the market lower by derivatives traders. This is my love