Bitcoin may fall or rise on Fed future



As Bitcoin continues to smolder under the $50,000 mark, analysts are looking at which way the coin is going to go short-term, and they seem to be somewhat flummoxed.

Julia Arvelaiz at NewsBTC reports today many traders are looking at the actions of the Federal Open Market Commission (FOMC) as well as the Federal Reserve Bank, and trying to figure out whether tapering is going to have an effect on Bitcoin prices.

“Investors have derisked as all eyes are on and the current Federal Open Market Committee (FOMC) meeting and the U.S. Federal Reserve tapering of asset purchases, fearing Chairman Jerome Powell will be –too– hawkish,” Arvelaiz writes. “There are many speculations running around and some experts have suggested this Wednesday could turn into a ‘buy the rumors, sell the news’ event, thus Bitcoin could see more losses….As NewsBTC has reported before, the central bank is expected to start reducing its net asset purchase month by month by $10 billion for Treasury securities and $5 billion for agency mortgage-backed securities. The scenario could get uglier for the traditional and crypto markets if the Fed decides on a faster taper, doubling the pace to $30 billion a month, raising interest rates earlier, meaning higher volatility.”

Arvelaiz notes that while Bitcoin’s correlation to equities has increased recently, its correlation to gold is seen as weaker overall.

Elsewhere in a press release from Prior Consultancy in the U.K., an unnamed author (oddly named Modestus Anaesoronye on a re-list site) suggests that fear selling is good for buyers.

“Bitcoin panic-sellers are ‘practically giving away’ their cryptocurrencies to wealthy buyers who will use the digital assets as an inflation shield, the analyst writes, citing the remarks of deVere Group’s chief executive Nigel Green, who he quotes:

“The recent selloff was triggered by a wider risk-off sentiment that also impacted many areas of global stock markets,” Green said. “It occurred as inflation is running hot and, therefore, encouraging central banks to tighten monetary policies, putting at risk the liquidity that has benefitted many asset classes, including Bitcoin. Wealthy crypto investors always buy in the dips. This is because they know that digital, global, borderless, decentralised money is, clearly, the future.”

So – buy on the dip?

Stay tuned.