Bitcoin (BTC) has dropped by nearly 3% in the past 24 hours, as the market prepares to digest the information provided by the minutes of the last meeting of the Federal Open Market Committee (FOMC).
The U.S. Federal Reserve raised its benchmark interest rate by 25 basis points during the latest FOMC meeting in an effort to curb inflation.
Currently, analysts expect that the central bank will delay its next rate hike until December at least, as odds of an increase during the October meeting are sitting at 22%, as per data from FedWatch.
However, the content of these FOMC minutes could change the market’s view on this matter, depending on how hawkish the discussion was and the overall attitude that members of the Committee have about monetary policy.
Market participants seem to be cutting back on their positions ahead of the release, possibly as they expect some volatility once the document is released. An increase in the odds of a rate hike in October after the minutes are published at 2:00 PM E.T. could accelerate the current decline.
ETF Inflows Continue to Be Positive Despite the Latest Drop
Despite the latest rejection of a move above $87,000, net inflows to Bitcoin-linked exchange-traded funds (ETFs) continue to be positive. Last week, investors poured $241 million into these vehicles, along with $29 million on Monday and Tuesday.
September finished with strong inflows of $2.65 billion. Although this represented a 23% downtick compared to the previous month, it means that Wall Street kept positioning for the continuation of the current rally.
Moreover, whales kept accumulating Bitcoin in September. According to data from Santiment, top wallets holding between 1 and 100,000 BTC added 20,000 tokens to their stash — the equivalent of around $1.6 billion.
Meanwhile, whales have acquired 30,000 BTC during the first 6 days of October. This further confirms that deep-pocketed players are expecting the continuation of the current rally in the mid- term, as both technical indicators and on-chain data confirmed the beginning of a bull market for crypto assets.
Bitcoin Price Forecast
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See all Bitcoin forecastsBTC Eyes Drop to $81,000 to Unlock the Necessary Liquidity to Rally to $90K
Turning to the 4-hour chart, our baseline scenario for Bitcoin appears to be unfolding, as the token is experiencing a strong pullback toward what we believe could be a strong buy zone.
The $87,000 resistance acted as a sell wall in the past few days, setting the stage for a much-needed correction, as the market needs fresh liquidity to keep the rally going.
We expect that this decline will continue toward the $81,000 level, which is both a psychologically and technically relevant price zone. If we get a strong bounce off that mark, that should confirm the resumption of the current uptrend.
That buy zone is in confluence with the 200-period exponential moving average (EMA) in this lower time frame, which further increases its importance for market participants.
A drop to this price level could offer an attractive opportunity to take a long position yielding a 4x risk-reward ratio if we set the target for the next leg up at around $90,000 for BTC.
