The short answer is markets will be on edge of volatility. Two major events that alter the course of many economies are about to happen. First is US CPI inflation data which is due today and the Federal Open Market Committee (FOMC) meet on wednesday. The dollar index (DXY) is currently trying to break out and go upwards towards 107.8. The dollar is supported by high interest rates expectations as the Fed has hiked its benchmark to battle inflation. In contrast, if the inflation is cooling down, a dollar sell-off is imminent. Today’s inflation data is key for markets all over the world. The final FOMC meeting of this year will take into account inflation to address the monetary policy.
Bitcoin (BTC), the world's largest crypto asset, has had a pretty calm price action for the past few weeks. However, BTC has been inching closer to a month high of $17,400. At present, the 20-day exponential moving average (EMA) at $17,070 is acting as short-term support and gives the much needed push to the upside ahead of CPI. Meanwhile, 50-day EMA currently at $17,600 will offer resistance to further upside for the moment. BTC cannot be expected to be sandwiched between these two levels as incoming volatility from Fed’s decision and inflation data might present a short-term opportunity for swing traders. Capitulation might not be on the cards yet.
Observing miner balances can be helpful. Current data shows notably larger balances compared to just a month ago. In short, net selling activity by miners appears to have subsided and their stockpiles of bitcoin are on the rise again. Bitcoin mining address balances have seen small reductions over the past year. According to coinmetrics, one-hop miner balances have increased by over 3%, or roughly 85,000 BTC since early October. Perhaps miners decided it’s time to HODL again.
Ethereum, the second largest cryptocurrency in the world. Of late, it has made several attempts to bottom out and resume an uptrend, having risen 20% from $1080 to $1300 in the past couple weeks. ETH is currently trading a tad above around the $1250 mark, having recently lost support at the .618 retracement of its June to August rally (from $880 to $2000). This, coupled with its recent rejection of the 200-day moving average at $1650, clearly indicates a bearish trend in its price action.
If the 200-day moving average resistance is reclaimed, this would be the first time this has happened in 2022 since January, making it a supremely bullish signal for the market. However, it is for these reasons that this event is also unlikely. On the macro front, there is little reason to be bullish in markets - both crypto and otherwise - worldwide. Thus, we expect the 200D EMA to remain strong, and maintain an upper limit, in the short-term to ETH’s price. Thus, ETH may head to support at $1120. However, if this level doesn’t hold, all eyes will be on psychological support at the $1000 level.
Traders can attempt to take advantage of the swings in the market ahead of CPI data and FOMC meet. Investors can wait for further implications on how Fed’s decisions are going to affect the crypto markets in the long term.
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Disclaimer: This article was authored by Giottus Crypto Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.