Fed policy keeps on dictating bitcoin price

In early November, a thorough analysis of major market movements over the past month is underway. Arcane Research senior analyst Vetle Lunde was able to identify the direction in which the market is likely to move for the foreseeable future.

According to Lunde, regardless of bitcoin's attractive price, the best approach to a market like this is to set an average dollar value in the short term rather than using leverage. The bitcoin market exhibits uniquely low volatility and follows the U.S. stock market closely, so it is important to monitor Q3 earnings reports.

Lunde believes that Fed policy will continue to influence bitcoin pricing. Federal Reserve Chairman Jerome Powell will speak after the Federal Open Market Committee meeting on Nov. 2.

The analyst thinks there are two scenarios to watch out for:

Scenario 1: Jerome Powell continues to use his precise methods for dealing with inflation and ensures that the market is prepared for further hikes. This, according to Lunde, is considered the most likely scenario. This Wednesday, he expects the correlation between BTC and other asset classes to remain high and the current 4.5-month trading range to persist. Along with that, activity will decline, leading to a longer favorable environment for the satoshi stack.

Scenario 2: Jerome Powell unobtrusively points to a reversal. In this scenario, the analyst sees a softening of the correlated market environment. Last week, they noticed how the unique structural market activity associated with cryptocurrencies caused correlations to decline due to a significant short squeeze. Expectations of a reversal will lead to similar reactions and reinvigorate the notion of BTC digital gold.

Bitcoin's muted growth, its correlation with equities and steady downtrend for nearly a year remain a threat, but many analysts believe Bitcoin's current price still remains undervalued.