Well, we’re almost there, two weeks left until the end of the year. It’s been an interesting week for markets. We had all the ingredients for a real fireworks party this week, with the Fed, BOE and ECB each meeting. However, with omicron rising scarily above all other market drivers at the moment, we were left short of any blockbuster moves. Still, there were some moves of note and chatting with traders about the week’s action it seems that move most are focused on is the near 10% drop we’ve seen in Bitcoin. Now, it’s worth noting that this move occurred primarily on Monday. However, the subsequent correction off the lows failed and price is now turning lower once again so this is very much a live move. So, let’s take a look at what caused the move and, as ever, if you caught it? Well done! If not? there’s always next week!
What Caused the Move?
Fed Tightening Expectations Weigh on BTC
Bitcoin has been on the backfoot over recent months, primarily as a result of the uptick in Fed tightening expectations. Heading into this week, these expectations fuelled a slew of sell orders across the end of last week and into the weekend which saw BTC sink on Monday. The reason being, the December FOMC on Wednesday of course.
The market was widely expecting the Fed to announce an uptick in the pace of it tapering program. With a higher percentage of institutional players now trading Bitcoin, a theme which has developed over the last two years, the market is now reaction to USD far more like a traditional risk asset, albeit with amplified volatility.
With the Fed having stepped up tapering as expected and with the bank’s economic forecasts and (crucially) dot plot forecasts revised higher, the near-term outlook remains skewed towards further downside for BTC. Additionally, the rising concerns around omicron are also hampering BTC here. Looking ahead, unless we see a major shift in the current narrative, BTC looks primed for further losses.
Technical Views
BTC
The breakdown through the rising channel from YTD lows has seen price trading lower within an orderly bear channel. The market is currently probing below the 50% retracement of lows-highs, as well as the 47760 level. With both MACD and RSI bearish here, the focus is on a further push lower towards 40990 next, unless bulls can get back above the 52930 level.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.