Data Suggests Bitcoin Gets Chaotic During FOMC Meetings


Bitcoin and other cryptocurrencies in the market have had an interesting week and a half. From the CPI report to the completion of the Ethereum consolidation, it has been a choppy activity throughout the market. Even with this, the market is still not done with its big events. The meeting of the Federal Open Market Committee is taking place on Wednesday, which, as in the past, promises unexpected moves for the cryptocurrency markets.

Expect fluctuations for bitcoin

The FOMC meeting has always generated volatility not only in the cryptocurrency markets but also in various financial markets. Bitcoin’s reaction to the FOMC meeting is becoming more prominent with increased correlation with the equity and macro markets. Given this, any FOMC meeting is expected to have a significant impact on the cryptocurrency market.

This is no different from Tuesday’s Federal Open Market Committee meeting. Previously, the FOMC meeting hours were very choppy in the space as the market awaited the outcome of the meeting. As such, a lot of volatility is expected on Wednesday, especially during meeting hours. More specifically, volatility is expected to peak between 17:00 – 21:00 UTC as noted during previous meetings.

Bitcoin volatility

Volatility expected during FOMC meeting | Source: Arcane Research

Naturally, the bitcoin price will respond to stock indices during this time and will tend to move in tandem with them. So while investors are watching the cryptocurrency market, it would be wise to also keep an eye on the macro markets during this time as well.

High fluctuations in encryption

The reaction of Bitcoin and other cryptocurrencies can vary during this time but extreme volatility is expected. This time around, volatility is also expected to be quite high as there is uncertainty across all markets as to whether or not there will be further price hikes.

It actually gives an idea of ​​the importance of the FOMC meeting for different financial markets and now the cryptocurrency market, as it becomes a bigger competitor. At the moment, there are reports of an expected rate hike of 100 basis points. The market reacted to this by pricing in a 20% chance of such a rally.

Bitcoin price chart from TradingView.com

BTC remains below $20,000 | Source: BTCUSD on TradingView.com

Interestingly, the volatility from the FOMC meeting does not appear to persist beyond the end of the meeting. In some cases, it may last for several hours, but by the next day, the volatility usually stabilizes and returns to normal.

So, in the end, the fluctuations caused by this meeting do not require much significance over a longer period of time. It often serves as a guide for traders as to how to create trades during this time. If the price increase continues though, Bitcoin could drop below $18,000 for the second time this year.

Featured image from Yahoo Money, charts from Arcane Research and TradingView.com

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