Today, the attention of participants of all markets: cryptocurrency, stock, etc. chained to the meeting of the Fed and how much they will raise the rate. Forecast +0.75%
Before we analyze on the bitcoin chart how the price reacted to the actions of the Fed and the statements of Mr. Powell, it is worth understanding one thing:
Indicators of fear and “pain” are simply off the charts. Many investors are already squeezed like lemons from constant stress and fear of sinking their deposits and are already on the psychological edge of giving up, and what will happen next. It is during such periods of psychological upheaval that even the slightest positive on the horizon or even the absence of additional negativity can trigger rapid growth.
Short positions and printing presses will launch a new wave of Bitcoin growth
The first wave of growth can be triggered by mass closings of shorts. Closing of short positions (shorts) by large and medium-sized funds or investors is buying on the market, and this is equal to a large green candle up.
Inflation has already peaked, and in late 2022 or early 2023, the Fed rate may be higher than inflation. In this case, the regulator gets the green light to stimulate the “dollar printing presses” to full capacity and the markets soar. This was the case in March 2020, when the markets began to be supported against the background of the Covid-19 crisis, look at the stories or remember it that way.
History of Fed rate changes and their impact on Bitcoin
Now on the rates announced by the Fed, expectations, fact and market reaction:
Bitcoin price reaction to Fed rate changes
- 15.06. the rate was raised by 0.25% higher than expected, at first the prices shot up, but then the minimum was updated by –16%, which set the low for 2022.
- On 27.07, the rate was raised to the expected 0.75% and the price of Bitcoin increased by almost +17% over the next 3 weeks.
- 21.09 if the rate is raised to the expected 0.75% or less, the markets will undoubtedly fly up. If the rate is raised by +1% or more, accelerating the possibility of starting a printing press, a short-term market drop is possible. With this fall, large funds can break all the stops of small and medium-sized long players and, at increased trading volumes, sharply close shorts and turn into longs. This is a double buy, a large green candle to the upside and a V-reversal on volumes.
The most negative forecast that can be seen right now is a drop in the price of BTCUSDT to $15800-17200, followed by a sharp upward repurchase.
If you are a medium to long-term trader, in our opinion now is the best period to place limit orders below to buy the grid in order to get a tasty average price as a result.
It is too late to close old longs, and it is dangerous to open new shorts.