On the eve of the FOMC July meeting, the bitcoin price has once again traded below the $22,000 level. With the 75 basis point interest rate hike that is largely expected later this week, investors are backing off riskier assets and this has driven the bitcoin price below $22,000, down by nearly 5%, for the first time in a week.
With the final day of the FOMC meeting on Wednesday, people are expecting the worst. Some analysts believe that the interest rate hike could be as high as 100 basis points.
After the bitcoin price failed to break through the $24,000 resistance zone the price began plummeting. It broke out of the bull flag it was trading in. The major question now is whether bitcoin’s price will continue falling and how much? We could see bitcoin drop all the way down to the major $19,000 support level. Bitcoin tends to be very volatile after inflation data is published or after FOMC meetings.
If the bitcoin price breaks out to the downside, as is often the case in a bear flag, the price target could be as low as $10,000. The price has been below the 200 moving average for the seventh consecutive week which is not a bullish sign at all.
Quite a few analysts now believe that we could see significant more downside in the bitcoin price in the short-term. While some believe the bottom is in, or near, the continued hawkishness of the Federal Reserve, ECB and recession fears are weighing down on bitcoin and most other assets.
In the last few hours the bitcoin price has hardly experienced any movement with only a little sideways movement. With Microsoft, Alphabet and Visa to report their earnings today, many analysts foresee a volatile day for bitcoin.
How Will Bitcoin Behave In the Short-Term?
Bitcoin is struggling to maintain its earlier upward momentum and has lost a large percentage of the gains we have seen since July 18th. Some factors are hinting at the fact that the previous rally to $23,000 had been a bear trap because we saw the bitcoin price break through the resistance very easily. But just as quickly as it had broken through resistance we saw it drop back down.
With bitcoin’s continued nosedive and some analysts believing that the bitcoin price could fall as low as $10,000 before rebounding, widespread hope in the markets is that bitcoin recovers soon.
In general, it appears that there is still too much hope in the market. We likely haven’t yet seen complete capitulation, which is why it’s probably not a bad idea to remain cautious and expect more downside in the short-term.
All eyes are on the FOMC meeting tomorrow.
