Bitcoin is set to experience some volatility in today’s trading session. The crypto market is gearing up for the US Federal Reserve (Fed) Federal Open Market Committee (FOMC) meeting, which could result in a non-event or lower risk assets.
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During this meeting, the Fed is expected to announce an interest rate hike. According to trading desk QCP Capital, the market has ruled out the possibility of a 100 basis point (bps) hike.
Market participants expect a 75 bps, if the Fed meets expectations Bitcoin and other digital assets look likely to resume their bullish momentum. QCP Capital said:
Every FOMC meeting this year has seen an immediate positive market reaction to the rate decision. We expect the same for this one.
Additionally, the trading firm says there is additional upside potential based on the Fed’s adoption of a “one-off 75 basis point” hike. Going forward, the financial institution could return to 50 basis points due to a slowdown in inflation measures.
Contributing to this theory, the US public company earnings season has been below expectations with no major surprises so far. Tomorrow July 28eApple and other big tech companies are expected to release their earnings reports.
If there are no major surprises, the crypto market should benefit from both the FOMC meeting and some relief from traditional financial markets. On the latter, QCP Capital noted:
With the risk of overly hawkish feeding pushed aside and with inflation easing, we believe markets will remain supported with previous lows providing a base (BTC at 17,600 and ETH at 880).
The post-FOMC rally may be short-lived as Bitcoin and the crypto market continue to see heavy selling pressure from miners. In this sense, QCP Capital foresees a sideways movement in the short and medium term.
What could trigger more downside pressure?
The trading company believes that there is a wildcard that could negatively impact global markets. US Congresswoman and House Speaker Nancy Pelosi is apparently planning a visit to Taiwan.
If the visit ever materializes, there could be an escalation of tensions between the United States and China. QCP Capital said:
August tends to be quieter with the US and Europe on summer vacation. If tensions boil over, we could see a move of risk aversion in the liquidity scarcity. From a volatility perspective, every FOMC this year has been a disappointment.
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At the time of writing, Bitcoin (BTC) is trading at $21,400 with a profit of 3% in the last 24 hours.
