(Kitco News) - Trading activity in the cryptocurrency market was relatively muted on Tuesday as investors across all markets await tomorrow's Federal Open Market Committee meeting, where the Federal Reserve will reveal the scope of the next interest rate hike.
It was a similar story in the traditional markets and the major indices as investors digested several economic releases, including a Job Openings and Labor Turnover Survey (JOLTS), which found that job openings in the U.S. unexpectedly rose in September to 10.7 million from 10.28 million the month prior.
Data from TradingView shows that Bitcoin's (BTC) price oscillated in a range between $20,330 and $20,685 throughout trading on Tuesday, with bulls managing to soundly defend the support at its current price of $20,450.
BTC/USD 4-hour chart. Source: TradingView
While some may take the lack of activity as a negative sign that interest in crypto is waning, Kitco’s senior technical analyst Jim Wyckoff reassured crypto investors by stating that “The recent sideways trading action on the daily chart, or pause, is not bearish.”
According to Wyckoff, “A fledgling price uptrend is still in place on the daily bar chart,” and “Bulls still have the overall near-term technical advantage.”
Focused on the Fed
Further analysis into the latest price action was provided by David Lifchitz, managing partner and chief investment officer at ExoAlpha, who noted that the summer resistance level of $20,300 turned into support last week and has thus far held up, which is an encouraging sign for bulls.
While October came to an end without any tricks or treats, Lifchitz warned that “the fireworks may just be delayed by a few days” in reference to the upcoming interest rate hike announcement from the Fed.
Lifchitz noted that while many headlines are focused on the expected rate hike of 75 bps, the thing that could really impact the market is the speech that follows the rate hike announcement.
“If they even hint at reducing the pace of their rate hikes, that could trigger a large bull stampede with risk assets, including cryptos,” Lifchitz said. “However, if they remain as hawkish as they have been so far, bears will retake control over the short term,” he warned.
To further complicate matters, U.S. labor data will be released on Friday, which could also be a market-moving event, according to the CIO.
“If it's still strong, then that would comfort the US FED to keep pedal to the metal on hiking rates, but if it begins to show some contraction, that could let the FED tune down its rates hike schedule,” Lifchitz suggested.
That being said, the CIO noted that after several rate hikes by the Fed that have outpaced its EU peers, the odds favor a slowdown of hikes after this one or the next, but timing the moves is key.
“The real problem for a trader is that these events are binary and will let the market react instantly, especially as their liquidity dried up, leaving them even more vulnerable to sudden large moves,” he warned. “Therefore either a trader takes a side and it's make or break... or they take a partially hedged bet to reduce exposure, leading to a smaller gain or loss.”
In conclusion, Lifchitz noted that “as frustrating as it can be to miss a potentially large move, that move could be the impetus for the market till' year-end, and therefore time to ride the wave up or down with a better return/risk profile.”
A quiet day for the alts
The altcoin market traded flat for the most part aside from a few notable exceptions.
Daily cryptocurrency market performance. Source: Coin360
The biggest gainer out of the top 200 was ABBC coin (ABBC), which climbed 15% to a price of $0.258. SwissBorg also managed to post a double-digit gain of 14.77%, while Dogecoin (DOGE) continued its upwards trek with a 9.59% increase on the day.
The overall cryptocurrency market cap now stands at $1.016 trillion, and Bitcoin’s dominance rate is 38.7%.
