Bitcoin limps into FOMC as flagging volume adds to BTC price hurdles
2023.05.03 13:00
Bitcoin (BTC) hit daily lows at the May 3 Wall Street open as markets counted down the hours to the Federal Reserve interest rate decision.
BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView
Fed set to hike into banking crisis
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD reaching $28,152 on Bitstamp, down 2.2% from the day’s highs.
The pair continued volatility into the May 3 meeting of the Federal Open Market Committee (FOMC), the event that accompanies interest rate adjustments.
As Cointelegraph reported, market sentiment has priced in a 90%+ chance of the Fed hiking 0.25% to copy its March moves, with little expectations of a surprise instead.
The odds of the hike materializing stood at 83% at the time of writing, according to CME Group’s FedWatch Tool, around 15% lower than the previous day.
Fed target rate probabilities chart. Source: CME Group
As in March, however, the Fed would be hiking into a banking crisis exacerbated by already high interest rates. Multiple United States regional bank stocks fell considerably the day prior, raising concerns that the crisis has gone nowhere.
“The regional bank sector, KRE, just posted its 3rd biggest daily drop of this crisis, falling nearly 7%. Yet, we still have not received any comment from the FDIC or Fed,” financial commentary resource, The Kobeissi Letter, told Twitter followers on the day.
“In fact, the Fed is expected to RAISE interest rates again today. Meanwhile, no major headlines are reporting on the crisis anymore. The lack of attention to what’s happening to our system is incredibly concerning.”
Kobeissi referred to the U.S. SPDR S&P Regional Banking ETF, down over 30% year-to-date.
Arthur Hayes, former CEO of crypto derivatives giant BitMEX, held a similarly bleak view, predicting the downfall of several regional banks this week in a copycat move following the shutdown of First Republic Bank at the weekend.
A few of these banks won’t be around next Monday. Unless the Fed cuts rates and signals more cuts, or #banktermfundingprogram eligible collateral is expanded to any loan on a US federally chartered bank’s balance sheet, it’s goblin town!
I got some puts last night. Yachtzee! pic.twitter.com/Ahe0fLqQ7C
— Arthur Hayes (@CryptoHayes) May 2, 2023
“PACW indicating down 10%. Oh Baby! Will they make it to Friday or does the Fed have a surprise do us?” he queried in a subsequent tweet.
“Isn’t it great there is such a resilient banking system in Pax Americana?”
Little hope of a Bitcoin price breakout
Despite the banking angst, Bitcoin remained aloof, failing to capitalize on sentiment and remaining firmly within an established trading range.
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“No doubt that BTC has lost some momentum. It’s currently ranging and whatever happens from here on out will determine the market structure and likely the next bigger move,” popular trader Daan Crypto Trades summarized.
“Above $30K would continue the bullish trend. Below $27K would make for a bearish market structure.”
BTC/USD annotated chart. Source: Daan Crypto Trades/Twitter
Fellow trader Pentoshi revealed a downside target of around $25,000 for his next potential trade, while Elizy offered two zones closer to spot price at which he would “pull the trigger.”
$BTC the only areas of interest to me where I would pull the trigger
me no limit order active today the spikes can be screwing you…so i will evaluate closely those indicated areas pic.twitter.com/x6f49jw7cs
— EliZ¥ (@eliz883) May 3, 2023
Trader Crypto-ROD, meanwhile, shared a more optimistic short-term BTC/USD roadmap.
$BTC Update.
Here possible bullish setup.
I’m still expecting consolidation move after all the huge volatility we get -> maybe alts time ?
As long as we hold the range POC all is okay imo.
Possible bullish retest today here before send it a bit higher (in the range) ✍️ pic.twitter.com/HsF8m2B93o
— Crypto-ROD (@RodMaartin) May 3, 2023
Firm bullishness, however, was hard to find among commentators, with trader Justin Bennett noting decreasing volume as a telltale warning sign of flagging upside potential.
“I’d love to know how so many believe Bitcoin will reach $100k or even $50k this year when volume looks like this,” he argued on May 2.
“A rally on decreasing volume = exhaustion.”
BTC/USD annotated chart. Source: Justin Bennett/Twitter
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
