This week bitcoin quotations moved down from the 29,500 – 31,500 range, where they have been for the past month. The price has fallen straight to the 38.2% Fibonacci retracement level (at 29,130), and now it determines the further direction. If the Fed doesn’t support the bulls of the cryptocurrency market tonight, bitcoin will have to look for support at even lower levels, for example, around 28,330.
Before today's Fed meeting, it is worth recalling that in June, Jerome Powell announced another two rate hikes this year. The minutes of the previous meeting are also quite revealing: only 6 members of the Federal Open Market Committee (FOMC) expected a single policy tightening before the end of the year. At the same time, 12 officials of the U.S. regulator are ready to vote for two or more steps of +0.25% on the interest rate range.
Such a situation shows high chances of bitcoin's decline. According to the Chain of Demand (CoD) predictive model, the positioning of traders on the Binance exchange indicates a further decline in bitcoin quotations with a 90% likelihood. The CoD model has accurately determined the direction of the main cryptocurrency's price movement ahead of 10 of the last 11 Fed meetings.
This week, the U.S. Congress will consider a bill to regulate the cryptocurrency market for the first time. Previously, control was exercised almost solely by the Securities and Exchange Commission (SEC), whose skeptical attitude to cryptocurrencies is well known. Now part of the authority is planned to be transferred to the Commodity Futures Trading Commission (CFTC). Republicans support this initiative, but they have a majority only in the House of Representatives. The bill to soften oversight of cryptocurrencies won’t pass without the votes of Democrats in the Senate. That could hurt the bitcoin rate.
The downward trend in bitcoin quotations is confirmed by technical indicators. RSI is gradually moving downward, but the distance to the oversold zone is still quite large. There are no significant obstacles for bitcoin rate to fall from this point of view.
We may offer you the following option of trading strategy:
Sell BTCUSD in the range of 29100 – 29300. Take profit — 28330. Stop-loss — 30160.
Also, traders can use Trailing stop instead of fixed Stop-loss at their disposal.
This content is for informational purposes only and is not intended to be investing advice.
