FOMC and BTC price ‘local low’ — 5 key points to understand in Bitcoin this week

Bitcoin (BTC) commences the new week with a sense of positivity as traders welcome the first green weekly candle in more than a month.

The strength of BTC’s price seems to be steadily improving following a lackluster August and early September, with BTC/USD moving closer to $27,000.

A strong weekly close sets the stage for what is expected to be an intriguing few days, which will feature a significant macroeconomic event in the United States that could drive volatility.

The U.S. Federal Reserve is set to convene to determine interest rate policy, and any unexpected developments could have considerable effects on risk assets, including cryptocurrencies.

In other developments, the outlook for Bitcoin appears favorable, with network fundamentals poised to reach new heights.

Strength “under the hood” is also evident in the behavior of holders, as wallet numbers continue to rise irrespective of BTC price movements.

Cointelegraph examines these issues and more as Bitcoin embarks on what is likely its most anticipated week of September.

Traders eye BTC price “local bottom”

Bitcoin exhibited minimal volatility over the weekend, but the calmer trading environment is already facing challenges as the new week begins, according to data from Cointelegraph Markets Pro and TradingView.

The weekly close on September 17 quickly transitioned into upward volatility, and at the time of this writing, bulls are striving to build on that momentum to achieve new month-to-date highs.

BTC/USD 1-hour chart. Source: TradingView

Well-known trader Credible Crypto suggested that the weekend range could potentially establish a “local bottom.”

“This area continues to be defended, with buyers re-entering here once more. It has the characteristics of a local bottom/base being formed in my opinion,” he informed X (formerly Twitter) followers overnight, along with a chart of order book liquidity on the largest global exchange, Binance.

“I think we probably push back up to 27k+ soon.”

BTC/USD order book data for Binance annotated chart. Source: Credible Crypto/X

A previous post highlighted the lack of potential in shorting at weekend levels, with bid liquidity on the rise.

The weekly close, meanwhile, excited Michaël van de Poppe, founder and CEO of trading firm Eight, who noted that key support was holding at the 200-week exponential moving average (EMA).

“Bitcoin is closing above the 200-Week EMA, which is crucial for bullish continuation,” he clarified.

“Next week we should maintain this and the price starts to resemble the 2015/2016 cycle.”

Van de Poppe shared a chart illustrating the relationship between the spot price and the 200-week EMA, currently at $25,700, since 2020.

“Markets are consolidating with a weekly close significantly above the 200-Week EMA for Bitcoin. The likelihood of the correction being completed is increasing day by day,” he added in a separate post.

BTC/USD annotated chart. Source: Michaël van de Poppe/X

Some remain cautious regarding Bitcoin’s outlook into 2024. Among them is popular trader and analyst Rekt Capital, who continues to monitor the potential for a bearish double-top pattern to emerge on weekly timeframes.

“Make no mistake – Bitcoin is in an early stage Bull Market,” he stated in part of his weekend analysis on X.

“Long-term the outlook is bullish. Mid-term? Over the next 7 months, we may or may not experience one last major correction. Will it happen? It would be prudent to at least be prepared for it if it does.”

BTC/USD annotated chart. Source: Rekt Capital/X

FOMC volatility expected with rate pause odds at 99%

This week, the term on everyone’s mind is FOMC — the Federal Open Market Committee — which will convene to determine future interest rates.

If past trends are any indication, the decision on September 20 will likely trigger some level of volatility across risk assets, with Bitcoin and crypto included.

The context surrounding the upcoming FOMC meeting is mixed, with last week’s macro data indicating inflation exceeding expectations, yet markets largely believe that the Fed will not raise rates further in response.

According to CME Group’s FedWatch Tool, the likelihood of rates remaining unchanged is nearly unanimous.

Fed target rate probabilities chart. Source: CME Group

This could lessen the impact of the FOMC event; however, conversely, an unexpected decision that contradicts market expectations would be felt even more acutely.

“This week sets the stage for the remainder of 2023,” financial commentary resource The Kobeissi Letter summarized while emphasizing upcoming macro data releases and more.

“Fed guidance on Wednesday will establish the tone for the next few meetings. Expect to see significant volatility this week.”

Key Events This Week:
1. Building Permits data – Tuesday
2. Housing Starts data – Tuesday
3. Fed Interest Rate Decision – Wednesday
4. Fed Press Conference – Wednesday
5. Jobless Claims – Thursday
6. Existing Home Sales data – Thursday
This week sets the stage for the remainder of 2023.

— The Kobeissi Letter (@KobeissiLetter) September 17, 2023

In discussing the likely outcome of the FOMC, crypto and macro insight resource Ecoinometrics indicated that the market expectations were unsurprising based on Fed signals.

“There will be no rate hike at the FOMC meeting on September 20. That’s what the Fed Funds futures are indicating,” it stated over the weekend.

“And in fact, they have been very consistent about that for quite some time now. The fact that the latest inflation figures aren’t moving in the right direction hasn’t altered that.”

Fed funds futures annotated chart. Source: Ecoinometrics/X

An accompanying chart noted that the market “never had doubts” about the anticipated outcome in September.

Difficulty, hash rate return to new records

Returning to Bitcoin, a resurgence in the “up only” trend of fundamental growth is expected to define the upcoming week.

Mining difficulty, which decreased by 2.65% during its last automated adjustment two weeks ago, is set to recover its losses on September 19.

The latest estimates from BTC.com indicate that difficulty will rise by a robust 4.6% — reaching new all-time highs in the process.

Bitcoin network fundamentals overview (screenshot). Source: BTC.com

2023 has witnessed a general uptrend in difficulty, briefly challenged only, even as spot price movements created more difficult conditions.

The same holds true for hash rate — the estimated processing power utilized by miners — which continues to achieve new records of its own.

A notable spike as the new week begins has become a topic of discussion in its own right, with growing optimism among commentators as a result.

Who is responsible for the hashrate jumping up almost 20%? Who do you think?
This is surreal.#btc #Bitcoin pic.twitter.com/paIwb57DNm

— Bitcoin Bootcamp (@BTCbootcamp) September 17, 2023

“The bitcoin network hashrate is at an all-time high,” Nicholas Cary, co-founder of Bitcoin data resource Blockchain.com, remarked earlier this month.

“What does this signify? The difficulty is a measure of how challenging it is to mine a Bitcoin block, or in more technical terms, to find a hash below a specified target. A high difficulty indicates that more computing power is required to mine the same number of blocks, enhancing the network’s security against attacks.”

Bitcoin estimated hash rate chart. Source: Blockchain

Blockchain.com estimated the hash rate at 422 exahashes per second (EH/s) as of September 17, while BTC.com currently estimates it at 430 EH/s.

Bitcoin address numbers reach multiyear highs

Just as Bitcoin miners show no signs of slowing down, the user base also appears to be consistently growing.

The creation of new BTC wallets has now reached its highest level since late 2017, coinciding with Bitcoin’s previous all-time high of $20,000, according to data from on-chain analytics firm Glassnode.

Bitcoin new addresses chart. Source: Andre Dragosch/X

According to the firm’s address tracking metric, even the subsequent rise to $69,000 did not elicit as significant a response in new address creation.

Active addresses, however, are reflecting mid-2021 levels, returning to those figures for the first time this month.

The data was shared on X by Andre Dragosch, head of research at crypto investment firm Deutsche Digital Assets. Dragosch questioned whether BTC price performance would mirror the resurgence seen across the Glassnode metrics.

“All-time high in addresses with 0.01 Bitcoin or less,” James Straten, research and data analyst at crypto insights firm CryptoSlate, noted regarding additional Glassnode data.

“Fifth or so strongest accumulation from this cohort in the past five years. This asset continues to be concentrated among a small group.”

Bitcoin wallets with a balance of 0.01 BTC or less chart. Source: James Straten/X

Crypto fear is never far away

While the outlook appears positive across the Bitcoin ecosystem, the average crypto investor has yet to regain their confidence.

Related: Bitcoin price all-time high will precede 2024 halving — New prediction

According to the latest data from the Crypto Fear & Greed Index, the prevailing sentiment in crypto remains one of “fear.”

The degree of apprehension is moderate — the Index, which normalizes sentiment on a 0-100 scale, is currently just below the “neutral” 50 threshold.

Fear has dominated since mid-August, with price movements being a significant factor.

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

Examining net unrealized profit and loss data among the BTC supply, popular trader and analyst Titan of Crypto highlighted what he described as a “striking correlation” between this year’s environment and that observed in the lead-up to previous Bitcoin bull runs.

“I believe we might see a similar price movement as Bitcoin experienced in the first two cycles,” part of his commentary suggested.

#Bitcoin Net Unrealized Profit / Loss striking correlation
– In 2012, 2016 as NUPL was contracting between Optimism / Anxiety and Hope / Fear areas BTC price was consolidating before resuming its upward trend.
– In 2019 as NUPL was surging, Bitcoin price was rallying without a… pic.twitter.com/110OMhdGcW

— Titan of Crypto (@Washigorira) September 17, 2023

This article does not contain investment advice or recommendations. Every investment and trading decision carries risk, and readers should conduct their own research before making a choice.