FED meeting on Wednesday! How could this affect Bitcoin?
Today we analyse ETH, ATOM, MATIC and more.
After rebounding from the technical support of $ 19,000, Bitcoin has soared above $ 24,000. This increase meant that the quotations of BTC broke above the technical resistance of $ 22,000, marking the upper limit that has been ongoing since mid-June of this year’s consolidation.
It is worth noting that the subsequent appreciation did not last too long; as a result, we have been seeing a decline in the quotations of BTC again for several days. This trend made BTC re-test the previously defeated resistance (now support) of $ 22,000 on Monday.
Suppose we were to rely solely on technical analysis, we could compare the dynamics of the last two movements, i.e. the earlier (more dynamic) upward movement and the current (less dynamic) downward movement, which would lead us to the conclusion that the current downward rebound may only be a form of a temporary correction after which Bitcoin will return to the path of growth. For this to happen, the BTC rate would have to rebound from the currently tested support level.
However, it is worth remembering that the plan for next Wednesday may significantly influence the market, i.e. on the 27th of July this year, a meeting of the Federal Committee for Open Market Operations (FOMC), during which the institution will probably decide on another interest rate hike.
It is currently estimated that the Federal Reserve will raise the federal funds rate by 75 basis points for the second time in a row. However, there is also over a 40% chance that the FED will raise interest rates by as much as 100bp in July, putting downward pressure on the stock and cryptocurrency markets.
So it seems that the first half of the week will be relatively calm on the virtual assets market, while the second half of the week, i.e. after the FOMC meeting, will bring more volatility.
Looking at the Ethereum quotes, we can see that the price of this cryptocurrency increased after rebounding from the technical support of 1000 dollars by over 65%. This increase helped to overcome the technical resistance of $ 1,250 and $ 1,400.
This trend only stopped around the next resistance in the $ 1720 region. If this barrier is dropped, the ETH listings could soon slide to the region of $ 1,400 or even further to the region of $ 1,250.
It is worth noting that both of these supports coincide with the significant Fibonacci measures from the last growth impulse: the first with a measurement of 38.2%, and the second with the golden ratio, i.e. 61.8%.
The catalyst for another depreciation may also be the upcoming monetary decision of the Unhealthy Reserve, which will be announced on the 27th of July this year.
Litecoin’s quotes rose by more than 53 %, from $ 40 on the 13th of June to $ 62 on the 20th of July this year. This tendency stopped in technical resistance, in the vicinity of which the first supply reaction had already appeared.
So if the currently tested resistance level is discarded in the near future, Litecoin could return to the downward path, sliding to around $ 43.
The possible defeat of this support and a lower break-even would increase the scope of the potential depreciation to the next support located at only around $ 25.
Looking at the Polygon (MATIC) quotes, we will notice that the price of this cryptocurrency has increased in just a month since the 18th of June this year. Until the 18th of July this year by over 211 % from less than $ 0.32 to above $ 0.98.
This tendency thus approached the resistance indicated by us of $ 1.02, and this is where the supply response appeared a few days ago.
If these declines continue, the MATIC price could drop even to $ 0.61 in the near future. Interesting support may also be the slightly higher line of the local upward trend.
Looking at the XRP quotes, we will notice that the price of this cryptocurrency has remained for over a month in a horizontal trend (in consolidation) between support of $ 0.30 and resistance in the region of $ 0.38.
In line with our last week’s projection, the XRP rate has recently returned to the upper boundary of the formation mentioned above, where a supply response reappeared a few days ago.
So if the downward trend that has been going on for several days continues, the XRP should reach the support of $ 0.30. A permanent break below this barrier could open the door to further depreciation towards $ 0.25 or even $ 0.20.
The realization of this scenario is also supported by the fact that the consolidations are corrective formations, which increases the risk of breaking the current formation downwards and the continuation of declines.
In line with last week’s projection, the stock of EOS has increased by over 42% over the past few days, reaching the technical level of resistance of $ 1.20, where the first supply reaction appeared at the beginning of the new week.
As we mentioned a week ago, “at this stage, however, it seems that this is the maximum range for a short-term boost. There are many indications that this rebound is only a form of correction after an earlier sell-off; thus, the market may return to the downward path after this rebound is over. “
So if only the currently tested resistance is permanently rejected, the price of this cryptocurrency could return to the downward path and fall again below $ 0.90.
Looking at the Polkadot (DOT) quotations, we notice that the price of this cryptocurrency has been moving in a horizontal trend (in consolidation) for over two months between the support of $ 6.30 and the resistance in the region of $ 8.50.
If only the declines going on for a few days continue, we could expect to re-test the horizontal support of $ 6.30 in the near future.
However, considering that a current consolidation is a form of correction after earlier declines, there is a high probability that the market will eventually break the bottom out of this system, which could drive further declines, even towards $ 4.