This week, the cryptocurrency market has experienced a rollercoaster ride. The market has been volatile, from the release of the consumer price index report to the completion of the merger between Ethereum and Bitcoin, it has been a wide ride. However, it is still not over yet. The next big event in the market is the Federal Open Market Committee meeting on Wednesday. That is expected to provide investors with unpredictable trading ideas. At the moment, BTC is trading at $19,325.45, 2% higher than yesterday.
Bitcoin Volatility Expected
The Federal Open Market Committee (FOMC) meetings have triggered volatility across different financial and crypto markets. Bitcoin’s reaction to these meetings has become more prominent due to the increased correlation between the macro and stock markets. Given the potential impact of these meetings on the crypto market, investors must be aware of the details of the schedule.
That is no different from the previous meetings, which were very volatile due to the market’s anticipation of the outcome of the meeting. On Wednesday, the market is expected to see a lot of volatility as the committee members are expected to release their monetary policy decisions. The volatility is expected to peak between 17:00-21:00 UTC.
Bitcoin’s price is expected to react to the equity indexes during this period, which will likely cause it to move in tandem with the stock market movement. Although investors should keep an eye on the crypto market, they should also pay attention to the macro markets.
Cryptocurrency Swings Are High
The volatility of cryptocurrencies such as bitcoin can vary during this period. However, it is expected that the market will continue to be volatile due to the uncertainty surrounding the possible rate hikes by the Fed.
The upcoming meeting of the Federal Reserve is very important for the financial markets. It gives a sense of the importance of the meeting to the crypto market. Various reports suggest that the Fed may raise the interest rate by a hundred basis points. The market has responded to these speculations by pricing a 20% chance of such a hike of 100bps.
The volatility during the meeting of the Fed does not last beyond the end of the session. Sometimes, it can last a couple of hours longer, but the volatility usually settles and begins to normalize the following day.
The volatility during the meeting does not have much relevance to the market over a longer time. It serves as a good indicator for traders as to how to construct their trades during this period. If the rate hikes continue, bitcoin’s price could fall below $18,000.
Is Bitcoin Poised for a Relief Rally?
According to QCP Capital, the Bitcoin price could be relieved if the Fed remains within its expectations and increases its interest rate by 75 basis points. That could trigger a spike in asset prices.
The firm noted that the last four meetings of the Federal Open Market Committee have led to a crypto relief rally. However, it’s not clear if this rally will last for a long time. According to QCP Capital, the question is whether this will be a single-day short-covering rally or if it will continue into the fourth quarter.
XRP Climbs 20% Over the Past Week
The price of a top-10 cryptocurrency, XRP, has risen steadily over the past week hitting a 20% rise. Notably, this is due to an ongoing lawsuit involving the Securities and Exchange Commission. As of 10:45 am, it had gained 4.6%. That makes it the best performer among the many cryptocurrencies in the market.
The overall cryptocurrency market was up by 1.2% during this period. The equity markets were also rising ahead of the Federal Reserve’s interest rate decision.
The strong performance of the crypto can be attributed to the filing of a motion by the parent company of the cryptocurrency, known as Ripple Labs, to dismiss the lawsuit. According to the company, the SEC’s position that it is security does not support the investment contracts issued by the fund. If the judge decides to give judgment in favor of the SEC, the legal saga will be over. So far, it seems to be in its favor. The move could boost the price of the cryptocurrency.