Bitcoin has seen a lot of volatility in recent weeks, making losses for four weeks in a row as April ended with the lowest returns in history, and the trend threatens to be continuing in May.
Since the beginning of the month, the crypto market has been trading in a narrow range as investors await the US Federal Reserve’s decision on a new rate hike, which has become a monthly defining factor of market direction.
The sideways market price action has resulted in 32,183 traders liquidating across the cryptosphere in the previous 24 hours, bringing the total amount liquidated to about $78.81 million, a sum significantly lower than in recent days.
After posting its worst returns in history, the April monthly close does not appear to favor bulls, and there is no indication of any short-term factors that could reverse the bearish trend.
The US economic policy decision, which is due on May 4, is expected to elicit a reaction from investors in the global equity market, with which Bitcoin has been moving in lockstep. It could, however, be a case of knee-jerk reactions as markets try to line with central bank policies.
Federal Reserve officials discussed how they plan to reduce their trillions in bond holdings at the March meeting, with a consensus of roughly $95 billion per month, according to notes provided.
While crypto’s recent price action remains mostly connected to macro variables, any shocks are likely to generate at least temporary volatility across markets, as they have in the past six months or so.
On the bright side, the market appears to be nearing a bottom, however experts are anticipating a final capitulation. In a tweet, Charles Edwards explained why he believes the S&P 500, which is a significant gauge of the stock market, is bullish in the long run.
Crypto trader and pseudonymous Twitter user ‘Cantering Clark’ provided insight into what could happen next for the BTC price, posting the following chart emphasizing the parallels between the current price activity and BTC’s price behavior in July 2021, implying that $28k could be the macro bottom.
The FOMC is scheduled to release its report at 2 p.m. ET tomorrow. The Fed is expected to raise interest rates, which is the first 50 basis point rate hike in over 20 years, and the start of balance sheet runoff shows that the Fed is serious about fighting inflation, according to Wells Fargo analysts.