Bitcoin price has been moving sideways in October and the cryptocurrency is experiencing downside volatility. On low timeframes, sentiment in the market is neutral with bullish bullish moves, but on higher timeframes, 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 last 24 hours and sideways movement in the last 7 days. BTC price remains range bound at current levels and with occasional retests of resistance at $20,500 due to macro conditions.
BTC price is trending down on the 1-hour chart. Source: BTCUSDT trade view
Bitcoin price is seeing an increase in volatility
Bitcoin price was recently repelled from the $20,500 area as the US economy is posting higher than expected employment levels and resilience to Federal Reserve (Fed) monetary policy. The financial institution grabbed the attention of the financial sector.
The current economic narrative revolves around the same issues: How far is the Fed willing to go to mitigate inflation and take markets down with it? And how much pain can US allies take before the financial institution pivots?
From this main narrative there are various subplots that focus on a potential economic recession. There are players in the crypto sector who are already anticipating a rally in Bitcoin price as central banks maintain their aggressive approach and increase the chances of breaking key components of the global economy.
With that in mind, the upcoming Fed Federal Open Market Committee (FOMC) meeting this Wednesday could provide more insight into the institution’s strategy. This event is likely driven by the increase in Bitcoin price volatility.
Historically, the cryptocurrency has seen similar price action leading up to the event and bullish price action in the days that followed. This time around, the US dollar, as measured by the DXY index, could act as a short-term headwind for the cryptocurrency.
On a daily basis, the DXY made a fresh monthly high in October as the currency continues its bullish trend. At the time of writing, the dollar seems poised to revisit the 115 area, which could limit the upside potential for bitcoin price and three major global currencies: the Japanese yen, the euro, and the British pound.
The DXY Index is in an uptrend on the daily chart. Source: trading view
When will the Fed turn around?
In the short-term, bitcoin price needs to see a rally against the US dollar to alleviate downward pressure. As long as the dollar remains strong, risky assets and global currencies are likely to trade lower.
The pressure on the Fed to halt its monetary policy and rate-hike program is already mounting. From international bodies to hedge funds, the global market is begging for mercy, but the Fed and its chairman Jerome Powell appear to be adamant.
Despite the UN’s call for the Fed to halt rate hikes, J. Powell seems adamant about taming inflation with no other goals. That stance, coupled with renewed fears of a recession, has pushed stocks to near-oversold levels.
7/n
— AndreasStenoLarsen (@AndreasSteno) October 10, 2022
If the Fed reiterates its position on Wednesday, bitcoin price could continue to experience downside volatility. In this scenario, traders should monitor the key support levels at $18,600 and $17,600 to prevent a major drawdown.
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