Is FED poised to disrupt crypto growth and will next FOMC meeting trigger market crash?

• BTC confirmed bearish alerts forward of the FOMC assembly.
• Regardless of warning within the brief time period, analysts remained optimistic within the medium time period.

Bitcoin [BTC] led the crypto market with notable de-risking forward of the Fed’s rate of interest choice, as analysts ready for a doable ‘hawk-like downgrade’.

The cryptocurrency fell from a file excessive of $108,000 to $103,000 simply hours earlier than the FOMC assembly. The markets had priced in a brand new price minimize of 25 foundation factors.

However analysts anticipated a “hawkish tone” on account of persistent US inflation, which might have an effect on the Fed’s rate of interest path by way of 2025.

An identical view was shared by crypto buying and selling agency QCP Capital. The corporate noted,

“The tone could also be considerably hawkish as inflation stabilizes above 2% and a robust labor market retains the Fed cautious.”

What’s subsequent for BTC?

The corporate added that the BTC chart confirmed bearish alerts, together with a night star, a sign of a possible development reversal.

“The technical outlook for BTC additionally seems cautious, with BTC printing a night star on the day by day timeframe and displaying bearish divergences.”

Supply: BTC/USDT, TradingView

For the unfamiliar, the night star is a bearish reversible candlestick sample with three candlesticks; a big bullish candle, adopted by a smaller one and eventually a big bearish candle.

This steered {that a} BTC crash could possibly be seemingly within the close to time period.

Apparently, choices merchants have been cautious since final week. They most well-liked fences on potential worth declines by way of put choices moderately than chasing worth will increase, as they did in earlier weeks.

In actual fact, the latest BTC new highs of $107,000 and $108,000 had been met by short-term bearish sentiment from choices merchants.

On the time of printing, Deribits The 25-delta danger reversal (25RR) was adverse for choices expiring on Friday, December 20, underscoring the bearish sentiment and wealth of put choices.

Supply: Deribit

Put choices expiring on January 3, 2025 additionally traded at a slight premium to calls (bullish bets). The remaining maturities of the primary quarter of 2025 (by way of March) had been between 1 and three volatility factors.

This was utterly completely different from a number of weeks in the past, when volatility factors might climb to 4-5 as choices merchants chased the rallies. Whether or not the development will change after the FOMC assembly stays to be seen.

That mentioned, QCP Capital maintained a bullish long-term outlook by way of 2025 regardless of near-term warning within the choices market.

One other analyst, Stockmoney Lizards, echoed the bullish long-term outlook, which acknowledged that there was room for added development for BTC based mostly on the month-to-month RSI worth.

Supply: