A View of Bitcoin & the Fed Funds Rate in 2022

November 2nd, 2022

Everyone knows not to trade FOMC meetings. The last meeting in September saw $37M in BTC liquidations – $28M of which were shorts. While BTC price held up the last time Chair Powell announced a rate increase, correlation to equity markets has spelled disaster for BTC price during the previous four FOMC meetings this year.

Correlation: BTC Returns & Eff Fed Funds Rate

While the expected inverse relationship between BTC returns and the Effective Fed Funds Rate grew this year, it weakened since September’s meeting. As the US central bank raised it’s target base interest rate five times this year to 3.08% as of yesterday, daily BTC volatility diminished.

After months of industry chaos and generally bearish sentiment, sellers ran out of BTC to panic dump during FOMC meeting. Moreover, the market has adjusted to rate increases. During today’s meeting, we’ll be watching the liquidation charts to see whether leveraged traders have adjusted their expectations as well.

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