Here is what Bitcoin [BTC] holders can expect after the FOMC reports

  • Bitcoin’s price reacted negatively as the FOMC report indicated a rise in interest rates.
  • Bitcoin tested the $18,000 region before falling back, but there are indications of a potential rally.

Bitcoin (BTC) and the cryptocurrency market could not have asked for a better outcome from the Federal Open Market Committee (FOMC) meeting that concluded on December 14.

After registering a gain that brought it to a level it had not seen since the beginning of the month, BTC reacted unfavorably to the data from the FOMC. How much of an effect did the news have on BTC and what can we expect in the coming days?

A dive into the report

The Consumer Price Index (CPI) was released on December 13, ahead of the FOMC report by Chairman Jerome Powell. US inflation eased to 0.1% from 0.4% in October, a positive development for the Federal Reserve’s efforts to rein in soaring prices.

Bitcoin (BTC) prices rose after the report was released because investors believed the Federal Reserve would be encouraged to reduce the pace of rate hikes if inflationary pressures on consumers eased.

However, Bitcoin’s (BTC) market behavior after the release of the FOMC report suggested that the news had dampened investor enthusiasm. US interest rates were increased by 50 basis points (Bps) on 14 December.

It’s also worth noting that it’s been 15 years since the federal funds target range was this high. Federal Reserve Chairman Jerome Powell has proposed that the final interest rate (the terminal rate) will be greater than 5%.

The price is falling, but the trend is still bullish

Looking at the daily timeframe of the BTC chart, it was clear that the asset did not react well to the news. According to the graph, Bitcoin’s price peaked around the $18,000 range on December 13 and 14 before crashing to roughly $17,600 at the time of writing.

The Visible Range Volume Profile analysis showed that the price could still go higher despite the apparent decline.

Source: TradingView

As Bitcoin approaching $17,600, it enters a low-volume node region, which could indicate impending price volatility. A significant price agreement generally accompanied by less rapid price swings is represented by a node with high volume.

Compared to high-volume nodes, low-volume nodes denote less busy nodes. To reach the next deal zone, prices often move quickly through these zones. The Relative Strength Index (RSI) indicator revealed that Bitcoin remained quite bullish despite the apparent, albeit modest, price decline.

BTC outflow dominates

The Exchange Net Position Change calculation may explain why Bitcoin remained bullish despite the apparent price decline. Glassnode’s data showed that the overall percentage of BTC leaving exchanges had increased.

If the value of this indicator is positive, it indicates that more deposits are now being made to exchanges than withdrawals are being made.

Bitcoin net position change

Source: Glassnode

Since investors usually deposit BTC in preparation for selling, this trend may be bearish. However, when the indicator’s value falls below zero, it indicates that more coins are being removed from the exchange wallets than are being deposited, which can be translated into a bullish trend.

It is important to remember that the current market conditions represent a period of historically low prices while examining BTC’s price action. Historically, December and January are the most bearish for assets.

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