Bitcoin commenced the week with a notable decline, diverging from the positive trends seen in both the stock market and gold, as it faced a daily loss of 2%. As the market gears up for the impending Federal Reserve interest-rate decision, analysts are hoping for a subsequent boost in Bitcoin’s price.
As trading began on Monday, Bitcoin’s value struggled to maintain a foothold around $115,000, prompting expectations that further downturns might be ahead. Data gathered from Cointelegraph Markets Pro and TradingView indicated that Bitcoin (BTCUSD) experienced a dip of up to 2% when compared to its highs earlier in the day. This decline occurred despite gains in the stock market, with the S&P 500 and the Nasdaq Composite Index recording upward trends. Additionally, gold’s price surged to $3,655, coming within $20 of reaching its all-time highs.
Michaël van de Poppe, a prominent crypto trader and analyst, linked Bitcoin’s recent performance to the forthcoming macroeconomic event, the Federal Open Market Committee (FOMC) meeting. Historically, Bitcoin has shown a pattern of trading downward leading up to these interest-rate decisions. In a post on X, he remarked, “Very classic price action prior to the FOMC meeting,” predicting ongoing corrections for Bitcoin and altcoins until the meeting concludes.
Market expectations are leaning toward a 0.25% rate cut from the Fed on Wednesday. While some participants in the crypto market voiced frustration over Bitcoin’s failure to join the broader risk assets rally, others pointed out encouraging technical signs. Among these indicators was a confirmed hidden bullish divergence for the Relative Strength Index (RSI) on weekly charts. Trader BitBull noted, “Bitcoin weekly hidden bullish divergence is now confirmed,” leveraging historical patterns that suggested previous divergences have led to significant gains for Bitcoin.
Fellow trader Merlijn echoed this sentiment, predicting that the macro landscape is signaling an inevitable upward movement for Bitcoin prices. Despite Bitcoin’s struggle, the broader sentiment in the market remained cautiously optimistic as the S&P 500 reached new milestones.
Interestingly, while Bitcoin grappled with its recent downturn, market sentiment for both Bitcoin and stocks portrayed a “leaning bearish” attitude. According to the trading firm Mosaic Asset Company, fear was the prevailing emotion as new highs in stocks were met with skepticism. They pointed out that large investors were net short on various stock futures, suggesting that the general positioning might signal a contrarian viewpoint.
This complex market sentiment was further reflected in the Crypto Fear & Greed Index, which hovered in neutral territory at 53 out of 100. This level is far from the overheated readings above 95 that typically accompany price movements close to historical peaks, indicating that a cautious optimism may still prevail among investors.
As investors await the Federal Reserve’s announcement, the market remains in a state of flux with various signals pointing to potential tipping points on the horizon.
