In the week from September 19 to September 25, Bitcoin was trading sideways between the levels of $18.1–19.9 thousand. Sharp downward impulses were observed on Monday, September 19, and Wednesday, September 21. In the first half of the week, all markets remained unsettled in anticipation of the results of the US Federal Reserve meeting on interest rates.
On September 21, following the meeting, the Fed raised the rate for the third time in a row by 75 basis points, to 3.00%-3.25% per annum. The Fed’s decision was expected in the markets, while the dollar index hit a new high after Jerome Powell’s speech. Powell focused on fighting inflation to curb it, and while traders took his speech as a signal to continue raising rates by 75 basis points until inflation begins to decline.
Traders expect the remaining two Fed meetings in 2022 to raise rates by 1.25 percentage points to 4.5%. The market is currently accounting for a 75 basis point rate hike on November 2 with a 72.9% chance.
After the Fed meeting, the Bitcoin rate fell from the upper limit of the price range of $19.9 thousand to $18.1 thousand, forming the lower limit as market participants sold off risky assets in response to the Fed’s rate hike. On Thursday and Friday, the price was in the range of Wednesday. Buyers defended the $18–19 thousand support level, while there is no certainty that they will be able to hold back sellers for a long time.
Since the Cryptocurrency market correlates with stock indices, Bitcoin also sank. The dollar index rose to 113.22 points. The S&P500 fell 1.71%, and the Nasdaq fell 1.80%.
It is possible that the dollar is now being pushed up not by expectations of a rate hike by the Fed, but by the collapse of the British pound and the euro. Rising energy prices hit Europe’s largest economy, and companies faced downsizing.
High inflation threatens the EU economy. The ECB was late in raising rates and fighting inflation, so due to rising electricity prices and gas shortages, not all businesses will survive the winter. The situation is similar in Britain. The German economy is on the verge of recession. For the 1st quarter, GDP growth in the eurozone amounted to 5.4%, and for the 2nd quarter — 4.1%. Consumer inflation in the euro area jumped to 9.1% from 5.0% per annum, industrial — by 37%. Industrial production and business activity fell to their lowest levels since the beginning of the year.
Next week expectations
No major data releases are scheduled for next week, but we should pay attention to the speech of the head of the US Federal Reserve, J. Powell, on September 27th.
Buyers need to go through $20.5 thousand in Bitcoin and gain a foothold above $21 thousand. If trading for the week closes above $19.5 thousand, then the weekly candle will look like a pin bar. Buyers need to hold on until the end of the month until the growth phase for US indices begins. The worst-case scenario for buyers is a retreat of Bitcoin to the level of $15,000.
Recently, we have seen a slight decrease in correlation with the S&P index. While the S&P plummeted by 5%, Bitcoin remained flat. Next week, the S&P rally is waiting for us, which is likely to be reflected in a slight increase within the $20.5 thousand zone. After that, we probably should be ready for a retest of the $17.5 thousand zone.
Ethereum (ETH) after the merger
Meanwhile, the rate of the sensational blockchain coin Ethereum (ETH) also fell in price this week, and by a larger amount compared to BTC. At the time of writing, ETH is trading around $1 390.
However, some analysts note that there is a strong area of convergence of support at around $1 200. If the price manages to rebound from it, this may mark the end of the correction.
Meanwhile, if the ETH rate steadily drops to $1 284, the MakerDAO vault, which currently holds assets worth about $4.3 million, will be on the verge of liquidation.
This week, the US Securities and Exchange Commission (SEC) drew attention to the concentration of nodes of the second largest cryptocurrency by capitalization in the United States. This position of ETH, according to the regulator, allows the application of US laws in relation to the project network and all transactions within it.
Ripple XRP rises above the market
Ripple is in the final phase of its legal battle with the SEC. On expectations of a positive outcome for the company, its XRP token is rising against the backdrop of a falling Cryptocurrency market.
Of the 10 largest Cryptocurrencies grown by capitalization, XRP is the only coin that has over the past seven days. Over the past day, it has added more than 9%, and over the week it has grown by 7%. At the same time, the remaining Cryptocurrencies lost from 7% to 20% in a week.
It became known that the court, which is considering the SEC lawsuit against Ripple, received petitions from both parties to make a decision as soon as possible. Traders and investors took this as a positive signal since such a joint behavior of the parties impliing the achievement of some agreements between them.
Meanwhile, the New York court requires Tether to prove USDT collateral sufficiency
The American court ruled that Tether is obliged to provide the court with financial documents providing the security of the USDT stablecoin. The issuer of the stablecoin Tether called this court order unreasonable but agreed to provide the requested documents.
New York Judge Katherine Polk Failla ruled that the issuer of the USDT Tether stablecoin must disclose financial documents to ensure that it is fully backed by the US dollar.
The company is in litigation due to currently claims of manipulating the Cryptocurrency markets. In addition to details regarding the timing of the trades, Tether was asked to provide general ledgers, balance sheets, income statements, and cash flow statements.