BTC retraced its recent gains on Wednesday, with analysts predicting a potential false breakout ahead of the Federal Reserve's interest rate decision.
Key points:
BTC failed to maintain its recent breakout above $94,500, as market tension rises with the approach of the Federal Reserve's interest rate decision.
Traders are prepared for unreliable price movements in both directions during the FOMC meeting.
Volatility in risk assets centered around Japan has become the next key issue.
Data from Cointelegraph Markets Pro and TradingView shows that BTC's price trend is declining as Wall Street opens.
After reaching $94,650 the previous day, BTC/USD failed to hold higher levels, including the opening price at the beginning of 2025.
As of the time of writing, the trading pair is around $92,000, with market participants expecting unreliable price movements during the announcement of the interest rate decision and the press conference.
Cryptocurrency trader, analyst, and entrepreneur Michaël van de Poppe noted on the X platform: "The FOMC meeting could be quite tricky."
Trader Daan Crypto Trades informed his X platform followers that after the price increase, the exchange order book lacks major liquidity clusters on both sides of the price.
"$BTC has consumed the liquidity cluster around $93,000-$94,000 as mentioned yesterday. From a liquidity perspective, this is the most logical movement. With this area broken, there are no major key areas recently."
As reported by Cointelegraph, the market has overwhelmingly anticipated a 0.25% rate cut by the Federal Open Market Committee (FOMC). However, Fed Chair Powell's outlook on future policy remains unclear.
Trading firm QCP Capital explained in its latest "Asian Perspective" market update that "the interest rate decision has almost been fully digested by the market, but the real focus will be on Powell's stance."
According to QCP analysis, after the FOMC's response, risk asset traders will shift their focus to Japan, as the Japanese bond market is in an unusual state.
"The Bank of Japan meeting on December 19 has become the next major risk event," QCP explained.
Bond impacts on yen carry trades could trigger potential market volatility, a concern that has already emerged in 2024, as the cryptocurrency market reacted in real-time to this phenomenon.
The Bank of Japan has signaled that it may diverge from global trends, with plans to raise interest rates next.
Related: Shorting the decline or buying the rise? FOMC results reveal the truth about Bitcoin (BTC) price movements
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