Bitcoin Price Kicks Off the Week In Red, What Fueled The Crash?

The Bitcoin price has been moving sideways as October marches on, and the cryptocurrency experiences downside volatility. On low timeframes, the sentiment in the market is neutral with upticks towards the bullish side, but on higher timeframes, BTC has been stuck in the same range for months.

At the time of writing, the Bitcoin price trades at $19,150 with a 2% loss in the last 24 hours and sideways movement in the last 7 days. BTC’s price remains rangebound in its current levels and with occasional re-test of resistance at $20,500 due to macroeconomic conditions.

The Bitcoin price was recently rejected from the $20,500 area as the U.S. economy records higher-than-expected levels of employment and resilience to the Federal Reserve (Fed) monetary policy. The financial institution took over the attention of the financial sector.

The current economic narrative gravitates around the same topics, how far is the Fed willing to go to mitigate inflation, taking markets down with it? And how much pain can the U.S. allies take before the financial institution pivots?

From this main narrative, there are different sub-plots with a potential economic recession taking center stage. In the crypto sector, there are actors already expecting the Bitcoin price to rally as central banks maintain their aggressive approach increasing the chances of breaking key components of the global economy.

In that sense, the upcoming Fed Federal Open Market Committee (FOMC) meeting this Wednesday might provide more insight into the institution’s strategy. This event is probably driven by the Bitcoin price’s increase in volatility.

In the past, the cryptocurrency has seen similar price action ahead of the event, and bullish price action in the days after. This time the U.S. Dollar, as measured by the DXY Index, might operate as a short-term headwind against the cryptocurrency.

On daily timeframes, the DXY was able to score a new monthly high for October as the currency continues its uptrend. At the time of writing, the dollar seems poised to revisit the area around 115, which could limit the upside potential for the Bitcoin price, and three key global currencies: the Japanese Yen, the Euro, and the British pound.

In the short term, the Bitcoin price needs to see a retrace in the U.S. dollar to mitigate the downside pressure. As long as the dollar remains strong, risk-on assets and global currencies are likely to trade in the red.

Pressure is already mounting on the Fed to halt their monetary policy and interest rate hike program. From international bodies to hedge funds, the global market is asking for mercy, but the Fed and its Chairman Jerome Powell seem adamant.

Despite UN’s call for the Fed to halt hikes, J. Powell seem adamant to taming inflation – with no other objectives. That stance paired with refuelled recession worries, have driven equities down to nearly oversold levels.

7/n

— AndreasStenoLarsen (@AndreasSteno) October 10, 2022 

On Wednesday, if the Fed reiterates its position, the Bitcoin price might continue to see downside volatility. In this scenario, traders should watch key support levels at $18,600 and $17,600 to prevent a larger drawdown.