The US Federal Reserve holds an important meeting on December 13th and 14th. This is to discuss interest rates and try to reduce the inflation rate in the country. The encrypted digital market is awaiting these decisions in fear of it and the impact of this meeting on cryptocurrency prices. Which is currently in a crisis situation, especially since the bear market is still going on for more than 180 days.
It is scheduled that the next meeting of the US Federal Reserve will discuss interest rates in light of the conditions of high inflation rates in the United States of America. Based on previous statements by Federal Reserve Chairman Jerome Powell, it is expected that the interest rate will increase by about 0.75% next week instead of 0.50%.
The Fed’s decisions may cause the price of cryptocurrencies to collapse
At a time when cryptocurrency prices are still below the resistance line that is forming at $17,000. Cryptocurrency analysts, market investors, and even traders seem apprehensive about the decisions the Fed meeting will end up making.
Analysts believe that the risks of overthrowing Bitcoin prices BTC Increase with the Fed meeting. Especially since the BTC price failed to reach $18,000 30 days ago. Analysts also fear that the Fed’s meeting will dampen investors’ enthusiasm for crypto or put pressure on volatile cryptocurrency prices. This will threaten the financial health of the high-risk virtual asset sector.
After rising marginally and crossing the $17,000 threshold, reaching $17.2,000 on December 11, the price of Bitcoin fell again by 1% on the evening of December 12, and settled at around $16.9,000 per unit, before rising a few hours later again and restoring its standing at the 17,000 line. dollar. While its weekly increase did not exceed 0.98%, with a market value of $327 billion and a trading volume of $5.3 billion in the last 24 hours.
This fear coincides with the attempts of long-margin traders to hold on to current price levels. With the downward fluctuations in the crypto market, it seems that Bitcoin and altcoin prices may suffer new setbacks due to the upcoming US Federal Reserve decisions.
US financial market indicators are getting complicated and foreshadowing an upcoming financial crisis
Published reports regarding the US economy indicate that selling and service costs have also increased over the past months. Which was a reaction to the interest rate hike by the Federal Reserve previously.
It appears that the prices of goods and services are still on the rise. This exacerbates the inflation rates in the country, which is expected to last longer than previously thought by the owners of capital.
Since the dollar, which represents the backbone of the US economy, will be the first thing to be discussed in the Fed meetings. It seems that it will also be controversial. Because the US Dollar Index (DXY) fluctuated between 104.67 and 105.23 in the last 24 hours. This indicator is used to measure the strength of the dollar against a number of the most important foreign currencies. On December 4, the index had reached its lowest level in the last 160 days, at 104.10.
As for oil prices, they have always been a focal point of discussion for the Fed as well and are the focus of investor interest. West Texas Intermediate WTI (one of the global benchmarks used in pricing other crudes, especially in North America, the largest oil market in the world, so it is the oil approved on the New York Stock Exchange.) recorded a new annual low at $71.10 in 8 Dec.
So, the US economic data, after a series of Fed decisions in the past months, indicates that confidence has been shaken in the US Federal Reserve’s ability to curb inflation without causing a major recession.
The Impact of the Next Fed Meeting on Bitcoin and Altcoins
The prices of BTC and altcoins have always been affected by the decisions of the world’s important central banks. Including the US Federal Reserve and the European Central Bank. The decisions of the Federal Reserve have always caused cryptocurrency prices to rise or fall. In its most recent statement, the European Central Bank slapped the crypto market when it shared a blog post saying that Bitcoin would not be an investment, currency, or financial asset. But all of this did not kill the crypto market, nor did it end Bitcoin and cryptocurrencies, nor reduce investor enthusiasm for them.
Increasing demands for crypto market regulation have played a big role in the price volatility of Bitcoin and altcoins. Where the US Securities and Exchange Commission (SEC) lawsuits against crypto pioneers caused losses in the digital market, in addition to the restrictions of some countries on encryption. And even the Fed’s decisions have always affected prices. The volatility in the crypto market contributed to quick settlements of buy and sell positions.
The Securities and Exchange Commission announced that the recent crisis in the cryptocurrency sector has caused widespread disruption. and that US companies may have obligations to disclose under Federal Securities Act the impact of recent events on their business and therefore whether they own crypto assets.
The delta deviation indicator is one of the main indicators in the cryptocurrency market forecasting equations. The indicator considers similar buying and selling options and is positive when the protective buy options become higher than the risk call options.
The delta skew also improved by 25% between December 4th and December 9th, which indicates that option traders are becoming less risk averse due to unexpected price swings. However, the current delta deviation of 15% indicates that investors are still in a state of fear.
Bitcoin margin trading is seeing a rise
Margin sales reflect the position of professional cryptocurrency traders. Because it allows investors to borrow cryptocurrencies. Where the investor seeks to increase exposure by borrowing stablecoins to buy Bitcoin.
OKX platform data also shows that its margin lending increased over the past week. Which indicates that professional traders increased their leverage even after the failure to breach the resistance line at $17.5K.
Investors tend to borrow stablecoins with a wide margin to buy bitcoin, especially as those who sell the currency are betting on lower prices in the future. The US Federal Reserve’s package of decisions will be of utmost interest to investors in the crypto market. Where it is expected to change the course and direction of the sector.
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