Bitcoin traders looking to position themselves should read this analysis
For the third time in a row, the Federal Reserve raised interest rates on 21 September by 75 basis points (0.75 percentage points).
The broader financial markets fell immediately after the announcement as share prices fell.
🟢Before Powell vs 🔴After Powell🔴 pic.twitter.com/1QwlBvAPgR
— unusual_whales (@unusual_whales) 21 September 2022
Not left out, the cryptocurrency market was also affected. After the hawkish move, the price of the leading coin, Bitcoin [BTC], immediately fell below the $19,000 price range, after which it rebounded slightly.
Far from over
According to data from CoinMarketCap, since falling below $19,000 on Wednesday (September 21), the price per BTC has since risen by about 5%. At press time, the coin changed hands for $19,342.38.
Although it is seemingly on the upswing, reports from cryptocurrency analysis platform CryotoQuant suggested that more problems lie ahead for the royal coin.
According to CryptoQuant, the past few weeks have been characterized by an increase in BTC’s influx into exchanges. It is trite that a rally in this metric is indicative of an increase in an asset’s short-term selling pressure. As confirmed by CryptoQuant, this growth in BTC’s influx into exchanges has “exerted selling pressure” on the largest cryptocurrency.
Furthermore, the cryptocurrency analysis platform noted that BTC’s hourly funding rates have been significantly negative. According to it, this was another indication that BTC “traders in derivatives markets were ready to sell short.”
Still trading at the $19,000 price level and suffering an 11% drop in trading volume since the Fed’s announcement on Wednesday, CryptoQuant analyst TariqDabil opined that for a significant uptick in the price of the leading coin to be recorded, investors may have to wait a little longer. According to Dabil, the leading coin still needs time to recover.
Before you buy the dip
A look at BTC’s Adjusted Output Profit Ratio (ASOPR) showed that the current bear cycle (which has been over 185 days long) has so far been characterized by many BTC investors selling at a loss.
According to CryptoQuant analyst, IT Tech, ASOPR has served as resistance in previous bear cycles. Whenever the price of BTC went up and the ASOPR registered a value of one (indicating that more investors were selling at a profit), this was usually followed by a “fairly strong rejection.”
IT Tech found that ASOPR has acted as a significant resistance for BTC in the current bear market. As a result, a strong rejection may follow if ASOPR eventually registers a value of one.