Bulls and bears in the bitcoin (BTC) market have engaged in a serious battle ahead of a key Fed meeting scheduled for Wednesday, May 4. The Federal Reserve is likely to raise interest rates by 50 basis points amid soaring inflation.
Thus, the U.S. stock market experienced nervousness, which spread to the cryptocurrency market. Over the past 24 hours, the price of bitcoin has fluctuated around $38,000 to $38,400, with no momentum to move higher.
Network data provider Glassnode reports that bitcoin’s ownership structure is changing:
Long-term bitcoin holders continue to capitulate with a huge divergence between their buy price (blue) and their sell price (pink). This is their largest capitulation in bitcoin history.
While the BTC price remains under pressure, the number of “daily active addresses” is growing.
In the chart below from Santiment, we can see how “basic” network activity on the bitcoin network continues to grow.
The number one altcoin Ethereum (ETH) is following the same path. If we look at the ETH/USD price chart, we see that the downward wedge is shrinking more and more. Therefore, it is possible that we will see an upside breakout in the next few days.
The current price movements show a serious “stress test” ahead of the Fed meeting for both bitcoin and Ethereum. Abraham Chaiby, co-founder of Dexterity Capital, a cryptocurrency quantitative trading firm, commented on the market:
“Without a clear Fed meeting trigger, I would expect further consolidation [for bitcoin] as option sellers try to capitalize on short position volatility. My guess is that 50 basis points would not be a trigger.
Any long-term forecasts from Powell signaling lower inflation and a calmer stance on future hikes could have a bigger impact.