Bitcoin (BTC) fell into the Wall Street open on Feb. 16 as markets held their breath over upcoming comments from the United States Federal Reserve.
Trader: Chop then breakout “makes sense” for Bitcoin
The pair had managed to hit $44,500 overnight, these gains dissipating as traders awaited cues from the Fed on inflation, asset purchase tapering and the all-important interest rate hike schedule.
With Bitcoin and altcoins highly correlated with stocks, any testing times for traditional markets in the form of rate hikes could equally spell gloom for crypto investors.
The written document, due at 7 pm UTC, will cover a meeting of the Federal Open Market Committee (FOMC) from late January.
Commenting on the event, Gina Martin Adams, chief equity strategist at Bloomberg Intelligence, argued that reduction of the Fed’s balance sheet, now at nearly $9 trillion, could spell worse pain for equities than a rate hike.
“I’m still more worried about the balance sheet than rate hikes. Since 2010, changes in the balance sheet explained nearly one-third of the move in the market’s multiple, and every 100-bp drop in the balance sheet could shave 29 bps off the S&P 500’s forward P/E,” she noted.
Among crypto traders, the mood was thus one of near-caution against broader cautious optimism.
“Still believe more upside to come, but a short-term pullback and/or chop before major resistances are breached makes sense sooner than later,” popular Twitter account Crypto Chase said as part of comments overnight.
For Bitcoin trader and analyst Rekt Capital, meanwhile, attention was further out than the hourly chart. The coming weekly close, after last Sunday’s disappointment, still had the opportunity to reveal an uptrend in the making.
It’s mid-week but #BTC is still positioned for an orange circled Weekly Close
— Rekt Capital (@rektcapital) February 16, 2022
BTC bids inch higher
A look at order book composition from major exchange Binance on the day revealed further encouraging signs.
The past 24 hours saw additional buy support opened at $43,000, along with a larger-volume support zone just below $42,000.
At the same time, data from on-chain analytics resource Material Indicators showed sell-side orders at $45,000 were being slowly thinned out.