After a bullish run last week, and a relatively-volatile Monday and Tuesday, Bitcoin’s price remains flat on Wednesday as the cryptocurrency manages to hold its current support at the $21k level. Currently trading at $21.3k, Bitcoin’s market cap remains above $406 billion. However, we’re seeing a sharp decline in trading volume for BTC, with a 24-hour volume of $26 billion, down over 32% in the past day.
Key Points:
- Bitcoin’s price holds the $21k support level, but trading volume continues to drop sharply.
- The historic Fed interest rate hike spells uncertainty for global markets and Bitcoin prices.
- Ethereum will likely outperform Bitcoin this week as “merge trade” continues to provide the necessary support for ETH.
Bitcoin Price Holds Support, but Market Is Losing Momentum
While it’s hopeful that Bitcoin manages to hold support, the market is losing momentum quickly as traders move to the sidelines in anticipation of the crypto’s next move.
We’re seeing a similar trading volume decrease across the board, Ethereum’s 24-hour trading volume is down 12%, XRP’s volume is down 14%, Cardano’s 24-hour volume is down 9%, and Solana’s exchange volume decreased by over 18% in the past day!
While some analysts might argue that low trading volume is a bearish sign, others believe less volume means the recent price action is unconfirmed. Since the current price action for crypto markets is flat, we can conclude that the sharp decrease in volume means Bitcoin is still looking for its next move.
Fed Rate Hike Planned for Today
With the Fed rate hike scheduled for today, it only makes sense that traders are waiting on the sidelines to see whether the 75 basis-point interest rate hike will affect Bitcoin prices.
With the Federal Interest Rates currently at 1.58%, U.S. interest rates will be brought to the 2.25%-2.5% range after the rate hike increase today. The rate hike is anticipated to affect the stock market negatively, creating further uncertainty in the market.
According to a recent report from Yahoo Finance:
“With interest rates at “neutral,” further rate hikes could have a more substantial bite into inflation, which clocked in at 9.1% on a year-over-year basis in June.”
After the CPI numbers released on July 13th revealed that inflation was rising, it was only a matter of time before the Fed executed another interest rate hike. The next release of the Consumer Price Index for July is scheduled for August 10th, which will shed light on whether inflation is slowing down and whether or not the Fed can ease up on its historic interest-rate hikes.
With the decrease in trading volume for crypto markets and the rising uncertainty in the markets, Bitcoin’s price will likely drop significantly this week. Prices are likely to recover by the weekend once the bearish news of the Fed’s interest rate hike settles in. Moreover, Ethereum will likely outperform Bitcoin and see a softer correction amid the “merge trade,” which continues to support Ethereum.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any service.
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