Why Bitcoin Price Could Bounce After Today’s FOMC Meeting

The Bitcoin price has been moving sideways over the past few days bound solely to macroeconomic factors. The benchmark cryptocurrency was rejected north of $20,000 after “The Merge” and seems poised to face volatility over today’s trading session.

At the time of writing, Bitcoin (BTC) trades at $19,200 with sideways movement in the last 24 hours and a 5% loss over the past week. As the market moves past “The Merge”, crypto has returned to its correlation with global markets and the most important factors driving the price action: inflation and interest rates.

What To Expect For The Bitcoin Price Ahead Of The FOMC Meeting?

Later today the U.S. Federal Reserve (Fed) will hold its Federal Open Market Committee (FOMC) meeting where it will announce its upcoming interest rate hike. As it has happened in the past month, the crypto market is poised to see an uptick in volatility ahead of this major event.

Market participants seem to be expecting another 75 basis points increase after the latest Consumer Price Index (CPI) print and the Non-Farm Payrolls (NFP) metrics. The results of these reports hinted at persistent core inflation in the U.S. dollar, according to trading desk QCP Capital.

The firm believes that the market will be looking at today’s interest rate hikes, the Fed’s plan for the future of its monetary policy, and its reaction to inflation. In that sense, today’s FOMC will be critical for market participants to have a deeper insight into the Fed’s strategy. The trading desk wrote:

(…) we believe the focus will be on the Dot plot. Markets will look for clear guidance on the expected number of hikes for the last 3 FOMC meetings of 2022, as well as the updated terminal rate FOMC members are forecasting for next year.

Without “The Merge” acting as a bullish catalyzer, and with Ethereum trading under a “sell the news” setup, the Bitcoin price and crypto market have flipped to extreme fear levels. This sentiment seems to be the norm across all financial sectors.

As seen below, even Gold is displaying a high correlation with risk-on assets, QCP Capital stated. The precious metal has underperformed in circumstances where Gold should be rallying, with high inflation, and a major arm conflict in Europe (Russia invading Ukraine).