Last week from September 12 to 16 was not very successful for the cryptocurrency market. Bitcoin losses amounted to 9.59%. The BTC/USDt rate fell to $19,400. Bitcoin collapsed on Tuesday, September 13, after the publication of the U.S. inflation report for August. The consumer price index showed a higher value than the markets expected. Cryptocurrencies collapsed along with stocks amid the dollar rally. At the end of the day, the Nasdaq index fell by 5.16%, the S&P500 index fell by 4.32%.
69 hours have passed since the release of U.S. statistics, but crypto investors still can't come to their senses, drifting around the $20,000 per bitcoin mark. Attention has now shifted to the U.S. Federal Reserve's September 21 meeting. After the inflation data, investors began to consider the possibility of a 100bp rate hike. According to the CME, there is a 24% chance of such an increase, up from 0% a month ago at 75bp. - 76%. Interestingly, the probability of a 100 bp rate hike is 57%, or 4%, at the Nov. 2 meeting. Hence the nervousness in all markets.
Buyers are under attack. They are trying to hold on to the $19,500 per bitcoin level, but strength is running out. Bitcoin is closely related to the stock market, so its direction will be determined by the dynamics of the stock indices. According to technical analysis, the S&P 500 index broke the trend line at 3,925 points. The rate of bitcoin fell below the level of 20.5 thousand dollars, which previously acted as resistance.
If the decline of indices will continue on the technical factor, the risk to return to the level of 18 thousand dollars will increase. The futures are declining at the end of the week, leaving no chance for the buyers to recover. If the S&P500 index closes the day down more than 1%, there are risks of seeing a 10% spill in the cryptocurrency market over the weekend.
Based on seasonal cycles since 1940, the S&P500 index is expected to turn up from early October and move up for the rest of the year. In this regard, the crucial event for stock and cryptocurrency markets will be the upcoming US Federal Reserve meeting on September 21. If stock indices do not sag much, a new rally is likely in October.
Next week, we will see a continuation of the downtrend in crypto-assets. The attention of cryptocurrency market participants is now focused on the FOMC meeting and the announcement of the US rate data, which will be held on Wednesday, September 21. A 75bp rate hike is already priced in, but in the event of a "surprise" and a 1% rate hike (which is now estimated to be 38% likely), prices on the stock and cryptocurrency markets will come under pressure in the moment amid a sell-off.
The closest movement targets for major crypto assets are $17,500 for BTC and $1,230 for Ethereum. Buyer interest is high at these levels and any significant market decline will be actively bought back by players. Bitcoin's one-year low is highly likely to be updated, but I expect the market to remain at current levels and continue to create conditions for the formation of the bottom at the end of the coming weeks.
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