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What To Expect from Bitcoin Following This Week’s Fed Meeting

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Markets often react to each Federal Reserve meeting in response to any monetary policy changes that could have an impact on asset valuations. Volatility is often seen across Bitcoin, stocks, and gold, both leading up to each meeting and in the wake of whatever is revealed.

With inflation in the dollar expected to be a top topic and theme of this week’s chat, all eyes are on Bitcoin and gold to see if they react similarly to they did during last month’s Powell speech. 

How Will Markets React To Wednesdays FOMC Meeting?

The first-ever cryptocurrency is designed in direct opposition to the dollar. Fiat currencies can be printed at whim, while only 21 Bitcoins will ever exist. Humanity is controlled indirectly through money supply, while Bitcoin aims to put that power back into the hands of individuals.

Using the technology, people can be their own bank, hedge against inflation with a hard asset, and keep the asset in cyberspace beyond the government’s reach and control.

RELATED READING | BITCOIN AND GOLD CORRELATION LEADS TO MATCHING CUP AND HANDLE PATTERNS

Gold offers similar benefits and is also a leading asset for investors seeking to shy away from the safe haven guise the dollar offers. During Federal Reserve chairman Jerome Powell’s recent speech, Bitcoin and gold markets experienced an abrupt surge in intraday volatility and an increased correlation during the event itself.

After such a sharp reaction the last time around, investors may not be giving enough weight to this week’s meeting, according to analysts.

BTCUSD Daily FOMC Meeting Dates 2020 | Source: TradingView

Bitcoin Rollercoaster Shows No Rhyme Or Reason To FOMC Response

But should investors be paying closer attention to this week’s upcoming Federal Open Market Committee meeting? Looking at past dates superimposed over Bitcoin’s price chart, there doesn’t appear to be any rhyme or reason to how markets react.

Throughout 2020, it has been nothing but bad news for the dollar. Bad news for the dollar is a boon for Bitcoin, but it doesn’t always lead to a boost, according to the above data.

The first meeting of the year followed a decent Bitcoin pump, and another short-term rally followed. A new high for 2020 was set, but Black Thursday sent Bitcoin retesting its bear market bottom.

Several emergency meetings helped prop up downward spiraling markets, and stimulus money helped Bitcoin and the stock market fully recover.

RELATED READING | WHY THE UPCOMING US ELECTION IS BITCOIN’S BIGGEST RISK

Another massive pump took place before and after the April FOMC meeting. A potential trend where the crypto market pumped with each FOMC meeting was starting, but in June, a dump came before and after.

In late July, the pre-meeting and post-meeting pump trend was back on. The late August meeting brought things back into pre- and post-meeting market dumps.

After that rollercoaster ride, we’re now here – with the first FOMC meeting back after Labor Day weekend and when the United States gets back to business after the lax summer months.

Analysts are expecting the Fed to reveal its plan to keep inflation within the 2% rate, but any deviation outside of this expectation could cause Bitcoin to soar.

But as past data has shown, there’s no real guaranteed response from each meeting, aside from a boost to overall market volatility. Prices, however, seem to go either way, making this next meeting and Bitcon’s proximity to $10,000 all the more critical.

Featured image from Deposit Photos; Charts from TradingView



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Bitcoin outflows from centralized exchanges surge to 100K BTC monthly

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Bitcoin outflows from centralized exchanges have surged to their highest level year-to-date, with roughly 40,000 BTC being withdrawn over the past seven days.

According to the Glassnode’s August 2 The Week On-Chain report, Bitcoin outflows have accelerated to a rate exceeding 100,000 BTC per month for just the third time since September 2019. The on-chain analytics provider estimates that just 13.2% of circulating BTC are currently held on exchanges — a new low for 2021.

“This represents a near full retracement of the significant inflow volume observed during the May sell-off,” the report noted.

BTC Exchange Net Position Change – Glassnode

Outflows surged to nearly 150,000 BTC monthly at the end of April 2020 following the violent “Black Thursday” crash that saw crypto prices tumble by more than 50% in less than two days after then-U.S. President Trump announced a travel ban between Europe and the U.S. in March as the coronavirus pandemic intensified. Despite the aggressive crash, Bitcoin had rebounded by 150% by the end of May 2020, driving heavy accumulation.

Outflows again came close to 150,000 BTC monthly in November 2020 as Bitcoin surged to test its then-record price high of $20,000, with BTC rallying into new all-time highs the following month.

Glassnode notes divergent trends between Coinbase and Binance throughout most of 2021, with Coinbase having experienced significant outflows while Binance has been the largest recipient of BTC.

However, Binance’s reserves are now beginning to dwindle, with 37,500 BTC (worth roughly $1.5 billion) exiting the exchange over the past week.

Coinbase balances remained steady in June. While the exchange received 30,000 BTC in mid-July, 31,000 BTC was withdrawn from the platform this past week.

Related: Traders are withdrawing 2,000 BTC from centralized exchanges daily

Looking at the macro sentiment, the on-chain analytics provider referred to its “Liveliness metric” to identify trends in accumulation.

The metric, which measures the ratio of the sum of coin days destroyed and the sum of all coin days ever created, indicates a broad trend of accumulation following May’s immediate sell-off.

“It seems that HODLing and accumulation is the most likely dominant trend in the on-chain market,” the report concluded.

BTC Liveliness chart: Glassnode