The Bitcoin price has been moving sideways on low timeframes after experiencing a rejection north of $20,000. The number one cryptocurrency by market cap was benefiting from Ethereum’s “Merge” bullish momentum, but with that factor gone, bears seem to be back in control.
At the time of writing, the Bitcoin price trades at $19,200 with a 14% loss over the past week and sideways movement in the last 24 hours. The cryptocurrency crashed below a critical support zone at around $18,500 during the weekend which has provided bearish arguments with fresh ammunition to forecast a new yearly low.
The Last Line Of Defense For The Bitcoin Price?
The Bitcoin price trended to the downside since late 2021 when a reached a new all-time high at $69,000. In the months that followed, Bitcoin went on to lose over 80% of its value crashing into a yearly low of $17,600.
The cryptocurrency bounced from those lows forming a short-term bottom at around $18,600. In recent days, BTC’s price dropped to $18,200 which could suggest bears have gathered enough momentum to push the price into its yearly low and possibly fresh lows below $17,000.
In a post “Merge” crypto market, macro factors seem to be exercising the most influence in the nascent asset class and traditional financial markets. Bitcoin has displayed a high correlation with major equities indexes since the start of its downside price action.
According to analyst Josh Rager, the S&P 500 Index “want lower” and could drag the Bitcoin price with it. The cryptocurrency is at a critical support zone, as mentioned, and breaking below its current levels could open the door for a fresh leg down. Rager recommended traders stay flat in U.S. dollars as the market decides on a direction:
This is the equities chart, it rejected off level above and looks like it wants lower. BTC is hovering at support for near $18k-$19k for the 5th time. It’s not looking so good right now but maybe we get a bounce again… I’m flat currently and will keep an eye on this.
U.S. Fed Poised To Influence Bitcoin Price
On low timeframes, the market seems to be gravitating towards liquidity pools created by leverage traders, according to Justin Bennett. There were over $1 billion in Bitcoin long staked at around $18,850 which seems to be the main support for the cryptocurrency’s current price action.
Nothing like a liquidity hunt to start your morning.
Nearly $1B in $BTC longs had built up at $18,850 on Binance alone.
— Justin Bennett (@JustinBennettFX) September 20, 2022
This status quo seems to be on track for disruption as the U.S. Federal Reserve (Fed) will hold its Federal Open Market Committee (FOMC) meeting tomorrow. Therein, the financial institution will disclose its stand on current inflation and a potential interest rate hike above 75 basis points (bps).
Economist Alex Krüger is aiming at a potential short-term downside price action followed by more sideways movements if the Fed stays within market expectations. If there are surprises, and the financial institution hikes above 100 bps, the crypto market might react to the downside.