The next FOMC meeting will be held this week. There is a possibility that the Fed will tighten monetary policy even more. If this is the case, then Bitcoin is expecting a serious decline in value.
Bitcoin still has a high correlation with stock markets. This is evidenced by US inflation data for July and August. The results of the past FOMC meetings also had the same impact on the stock market and the cryptocurrency market, respectively. Thus, by tightening monetary policy, the Fed strangled the markets.
Until last week, there was hope that this grip might loosen, but in August, US inflation rose again. It follows from this that the Fed’s reversal is not expected, because as long as inflation is rising, interest rates will continue to rise.
This week, between September 20 and 21, the next FOMC meeting is scheduled, and general expectations are that the Fed will raise rates again by 75 basis points. Expectations, however, depend on who you ask for an opinion from, and experts have different opinions. Indeed, there is a possibility that the Fed may exceed general expectations, and thereby cause a collapse in the markets.
A “collapse” is not a “soft landing”
The “soft landing” has recently become a meme, and Jerome Powell’s constant assurances that the Fed is “keeping the markets under control” are not a good sign. With each change in the interest rate, the markets will shrink more and more, and prices will fall lower and lower.
The situation in the world is also not rosy yet. Energy prices have risen sharply, the West is indirectly waging war against Russia, and the concept of “supply chain” is losing its meaning in the context of global fragmentation. If China had allowed the “saber” skirmish to end with an explosion in Taiwan, the catastrophe would have been perfect. The prophets of the apocalypse thrive in these times because their predictions of a great collapse have never been so plausible. However, the collapse will create great opportunities if enough cash can be saved.
Using the crisis as an opportunity
As for Bitcoin, of course, many will try to take advantage of this situation. Until now, according to Coinmarketrate.com , past bear markets have found their final bottom much lower. Starting from the top in the bull market of 2017, it was about — 84% before the bottom formed in December 2018.
If Bitcoin falls by about 85%, starting from the peak in November 2021, it will correspond to the level of $ 10,000, which has alternately served as support and resistance over the past few years.
However, whether Bitcoin will go in the direction of “10k” depends on various factors. Yes, and it is unlikely. The upcoming meeting will point the way and show whether the support in the area between $19,000 and $20,000 will hold, or the market will head to new lows in the coming months.