Is FED poised to disrupt crypto growth and will next FOMC meeting trigger market crash?

• BTC flashed bearish indicators forward FOMC assembly. 
• Regardless of short-term warning, analysts remained bullish within the mid-term. 

Bitcoin [BTC] led the crypto market with notable de-risking forward of the Fed fee determination as analysts ready for a potential ‘hawkish reduce.’ 

The cryptocurrency declined from an all-time excessive of $108K to $103K simply hours earlier than the FOMC assembly. Markets had priced in one other 25bps rate of interest reduce.

However analysts anticipated a ‘hawkish tone’ as a result of sticky U.S. inflation, which might have an effect on the Fed fee path into 2025.

An identical outlook was shared by crypto buying and selling agency QCP Capital. The agency noted, 

“The tone could also be barely hawkish, with inflation stabilizing above 2% and a powerful labor market maintaining the Fed cautious.”

What’s subsequent for BTC?

The agency added that the BTC chart flashed bearish indicators, together with a night star, a sign of potential development reversal. 

“The technical outlook for BTC additionally seems cautious, with BTC printing a night star on the each day timeframe and exhibiting bearish divergences.” 

Supply: BTC/USDT, TradingView

For the unfamiliar, the night star is a bearish reversal candlestick sample involving three candlesticks; a big bullish one, adopted by a smaller and eventually a big bearish candle.

This urged {that a} BTC crash might be possible within the brief time period.

Apparently, choices merchants have been cautious since final week. They most popular hedging for potential value declines via put choices than chasing value rallies as they did in prior weeks.  

In truth, the latest BTC new highs of $107K and $108K had been met by short-term bearish sentiment from choices merchants. 

At press time, Deribit’s 25-delta danger reversal (25RR) was detrimental for choices expiring on Friday, twentieth December, underscoring bearish sentiment and the richness of put choices.  

Supply: Deribit

Put choices expiring on the third of January 2025 had been additionally buying and selling at a slight premium to calls (bullish bets). The remainder of Q1 2025 (as much as March) expiries had been buying and selling between 1-3 volatility factors. 

This was fully totally different from a number of weeks in the past, when the volatility factors might surge to 4-5 as choices merchants chased the rallies. Whether or not the development will change after the FOMC assembly stays to be seen.  

That mentioned, QCP Capital maintained a long-term bullish outlook into 2025 regardless of the near-term warning within the choices market.  

One other analyst, Stockmoney Lizards, echoed the bullish long-term outlook, stating that there was room for additional progress for BTC based mostly on the month-to-month RSI studying. 

Supply: X