ollowing the lowest weekly close since July, Bitcoin (BTC) experiences another week of "huge" macro revelations. BTC/USD, like altcoins and risk assets more widely, has failed to bounce back after days of losses following the latest US inflation data.

The largest cryptocurrency has yet to convert $20,000 into compelling support, and as the third whole week of September starts, the risk is that that level will serve as resistance once more. Bulls have a lot to worry about in the coming days, as the Federal Reserve will determine the next key rate hike, which will have far-reaching consequences for the market.

Furthermore, the aftermath of the Ethereum (ETH) Merge remains to play out, while reimbursements to creditors at defunct exchange Mt. Gox add another perspective cloud to the price landscape. Cointelegraph examines five potential market-moving aspects to watch in Bitcoin over the next week.

Fed rate hike is in the spotlight

The week's main event is the Federal Reserve's judgment on the key interest rates. The firm will be subjected to pressure to respond after the August Consumer Price Index (CPI) print came in hotter than anticipated.

As a result, according to the CME FedWatch Tool, as of September 19, the market has fully implemented a minimum 75-basis-point climb for the Fed funds rate and is not undervaluing the possibility of a 100-basis-point hike. A rate hike of 100 basis points would be its first since the early 1980s.

The Federal Open Market Committee (FOMC) will meet on September 20-21, and a declaration affirming the hike and Fed assistance for the figure involved will be issued.

"The Fed will not be easing any time soon," Mike McGlone, senior commodity strategist at Bloomberg Intelligence, said in an interview with Kitco over the weekend.

He said that risk asset growth has swung way far to one side since the March 2020 crash, and a reversal is now very clear. McGlone continued, stating a long-held theory about the cryptocurrency's future, that crypto will play a role in the overall market reset, and Bitcoin will eventually come out ahead. Gold will also transcend, but the pain will come first for both.

A 100-basis-point action this week could accelerate that process, which is currently seeing catalysts from central banks outside the United States after they were originally slow to begin raising interest rates to combat inflation.

Meanwhile, popular Twitter analytics account Games of Trades stated that the S& P500 was approaching a critical juncture ahead of the start of Wall Street trading.

The spot price falls after a poor weekly close.

The last week has seen a buildup of tailwinds for the platform, resulting in a drop in BTC price action.

BTC/USD lost over $2,000 in a single weekly candle, ending below $20,000 for the first time since July, according to data from TradingView. The close was preceded by a sharp drop, with the pair dropping below $19,000.

The bearish atmosphere might be understandable — the Ethereum Merge had become a "sell the news" event, contributing to a new risk asset flight along with macro triggers.

Analysts are now assessing the likelihood of the downtrend continuing at least until the Fed rate announcement. "BTC has cut through the weekend, but there's always the possibility of some volatility before the close," on-chain analytics resource Material Indicators wrote on Twitter on September 18.

An accompanying chart depicted the current situation on the Binance order book, with assistance at around $19,800 since price action failed to sustain.

The day before, Material Indicators explained that there was little point in expecting a more profound drop to be avoided. According to the order book, bidding movement was still insufficient to maintain current levels.

Meanwhile, popular trader Cheds predicted a macro bottom in Q4 this year, explaining Bitcoin as right on track to do so.

Shorts were piling up on both Binance and FTX at the time of writing, indicating a coordinated effort by derivatives traders to drive the market lower. Ninja, another popular account, argued this would not be likely to succeed beyond the Wall Street open.

US dollar coiling beneath a multi-decade high

Meanwhile, the US dollar, which has recovered from losses seen following the CPI print, is looking for a potential macro high. The US dollar index (DXY), a traditional crypto headwind, is trading at just under 110 after consolidating for several days.

Earlier this month, the Index reached 110.78, its highest level since 2002, while avoiding significant retracements. Last week, Hyland predicted that a new blow-off top for DXY would support a capitulation event in risk assets.

Ethereum suffers from post-merger blues

In the week following the much-touted Merge, Ethereum is experiencing a significant drop in value.

Last week, ETH/USD fell 25%, potentially tilting the market cap share back in Bitcoin's favor. Currently trading below $1,300, its lowest level since July 16, the pair is receiving bearish forecasts from analysts and traders alike.

Ethereum fell up to 19% against BTC over the week, while the share of the total crypto market cap increased 1.2% since September 14. Everything was still in place for a generational entry opportunity on the pair, according to well-known trader CryptoGodJohn.

While ETH/USD is still above its 200-week moving average (WMA) at its existing pace, Bitcoin is below its own equivalent, according to Samson Mow, CEO of Bitcoin adoption startup JAN3.

During crypto bear markets, the 200 WMA serves as an important trendline and restoring it after it has been lost as support has historically signaled a return to strength.

Even though recent price volatility has increased on-chain activity, hodlers remain steadfast, according to on-chain data. According to the analytics firm Glassnode, coins kept for at least five years show only one trend: up.

Glassnode revealed in new data on the day that the percentage of BTC demand last active in September 2017 or earlier reached a brand-new all-time high of 24.8%. Meanwhile, the amount of active supply between five and seven years ago reached its highest level in nearly two years — 1.01 million BTC.

However, when it comes to Bitcoin, the long-term trend by many seasoned investors is clear, as demonstrated by the supply share held by long-term holders (LTHs).

"LTH Supply is the volume of Bitcoin that has been dormant for 155 days and is statistically the percent less likely to be spent all through market volatility," Glassnode stated last week as the metric reached an all-time high of 13.62 million BTC.

What do you think about the fed rate hike? Let us know your thoughts by sharing this article on social media.

Sep 19, 2022
Crypto News

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