Bitcoin Price Kicks Off the Week In Red, What Fueled The Crash?

Crypto News
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Bitcoin price moves sideways as October progresses, and the cryptocurrency is experiencing downward volatility. On low time frames, the market sentiment is neutral with ups and downs to the bullish side, but on higher time frames, BTC has been stuck in the same range for months.

At the time of writing, Bitcoin price is trading at $19,150 with a 2% loss in the past 24 hours and sideways movement in the past 7 days. The price of BTC remains within the current level and with the occasional new resistance test at $20,500 due to macroeconomic conditions.

Bitcoin price BTC BTCUSDT
BTC’s price trends are falling down on the 1 hour chart. Source: BTCUSDT trading overview

Bitcoin price sees spike in volatility

Bitcoin price was recently pushed out of the $20,500 area as the US economy records higher-than-expected levels of employment and resilience to Federal Reserve (Fed) monetary policy. The financial institution took over the attention of the financial sector.

The current economic story revolves around the same issues: how far is the Fed willing to go to cut inflation and bring the markets down? And how much pain can the US allies endure before the financial institution turns?

There are several subplots of this main story centering on a potential economic recession. In the crypto sector, there are already actors who expect the Bitcoin price to rise as central banks maintain their aggressive approach and increase the likelihood of breaching key components of the global economy.

In that sense, the upcoming meeting of the Fed Federal Open Market Committee (FOMC) next Wednesday could provide more insight into the institution’s strategy. This event is likely driven by the increase in Bitcoin price volatility.

In the past, the cryptocurrency has seen similar price action ahead of the event, and bullish price action in the days following. This time around, the US dollar, as measured by the DXY index, could act as a short-term headwind against the cryptocurrency.

On daily time frames, the DXY was able to score a new monthly high for October as the currency continues its upward trend. At the time of writing, the dollar appears poised to revisit the area around 115, which could limit the upside potential for Bitcoin price and three major global currencies: the Japanese yen, the euro and the British pound.

Bitcoin price BTC BTCUSDT DXY
The DXY Index is in an uptrend in the daily chart. Source: Trading Display

When does the Fed flip?

In the short term, Bitcoin price needs to see a pullback in the US dollar to ease downward pressure. As long as the dollar remains strong, risky assets and global currencies are likely to trade in the red.

Pressure is already mounting on the Fed to halt its monetary policy and rate hike program. From international bodies to hedge funds, the global market is asking for mercy, but the Fed and its chairman Jerome Powell seem adamant.

If the Fed reiterates its stance on Wednesday, Bitcoin price may continue to see downward volatility. In this scenario, traders should watch the key support levels at $18,600 and $17,600 to avoid a bigger draw.

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