Bitcoin (BTC) Bulls and Bears Engage In Major Battle A Day Before the Fed Meeting
Bitcoin (BTC) market bulls and bears have been engaging in a major battle ahead of the key FOMC meeting scheduled later today, Wednesday, May 4. Amid soaring inflation, the Federal Reserve is likely to hike interest rates by 50 basis points.
Thus, the U.S. equity market has been jittery and so has the crypto market. In the last 24-hours, Bitcoin has been oscillating around $38,000 levels. Over the last week, Bitcoin has been struggling to find momentum in either direction.
On-chain data provider Glassnode reports that the ownership structure and fundamentals of Bitcoins have been changing simultaneously. Also, some major divergences are in play. Glassnode reports:
“Bitcoin Long-Term Holders continue to capitulate, with a huge divergence between their purchase price (blue) and their selling price (pink). This is the largest LTH capitulation in Bitcoin history”.
Bitcoin and Ethereum Address Activity Is Picking Up
While the BTC price remains under pressure, its “daily active addresses” have been on the rise. In the below chart from Santiment, we can see how the “base” network activity for Bitcoin keeps on growing.
On the other hand, Ethereum (ETH) too has been following a similar route. Ethereum has been following up with the Bitcoin price correction since the beginning of the year. Over the last week, the ETH price has been hovering around $2,800.
If we see at the ETH/USD price chart, the falling wedge is getting tighter and tighter. Thus, it is possible that we could be seeing a breakout on the upside in the coming days.
The current price movements shows a major “stresst test” for both Bitcoin and Ethereum ahead of the FOMC Meeting. Speaking to MarketWatch, Abraham Chaibi, co-founder of quantitative crypto trading firm Dexterity Capital said:
“Without a clear trigger from the FOMC meeting [on Wednesday], I would expect further consolidation [for bitcoin] as options sellers try to earn a yield shorting volatility. My guess is that 50bps is not going to be the trigger, because we’ve all seen this coming. Instead, any longer-term forecasts from Powell — namely anything that signals that inflation is already pulling back and that the Fed might take an easier stance on future hikes — could have a more significant impact”.
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