Bitcoin Falls Below $75,000 Ahead of Fed Decision

In a few hours, bitcoin erased the rebound that had taken it to $79,579. BTC fell below $75,000 to $74,984, its lowest level since August 21. This break came less than 24 hours before a major decision by the American Federal Reserve, while a rate increase of 25 basis points is anticipated. With support at $77,000 now broken and market sentiment in sharp decline, investors are approaching the Fed’s verdict in a profoundly reworked configuration.

Bitcoin falls to its lowest level since August 21

This turnaround was built in a few hours. Until the afternoon of September 14, bitcoin was still continuing a rally that had brought it back above $78,000. The first crypto therefore reached a session high of $79,579, before gradually losing its momentum. Then, the selling pressure caused the $77,000 support to give way, then drove BTC to $74,984, its lowest level since August 21. Despite an attempted rebound, the price is currently around $75,900, down 3.5% over one day.

Bitcoin had remained well above $77,000 for about three weeks. Thus, the change in mood can be read in the Crypto Fear and Greed Index. The indicator rose from 81 on August 21, a level corresponding to a situation “extreme greed”at 67 on September 15. From then on, the euphoria surrounding US Treasury bond buybacks gave way to growing concern about the risk of rising rates.

In a few hours, several indicators demonstrate the extent of the reversal:

• A session high at $79,579;
• The break of the support of 77,000 dollars;
• A low of 74,984 dollars, not seen since August 21;
• A drop of 3.5% over twenty-four hours at the time noted by the source;
• A Crypto Fear and Greed Index reduced from 81 to 67 between August 21 and September 15.

Fed decision revives questions about rates

Investors now have to deal with the FOMC meeting, while Senate negotiations around the CLARITY Act have failed. For Vik Sharma, CEO of Cake Wallet, the expected rate increase does not necessarily call into question the long-term thesis of bitcoin.

He precise :

Higher rates can squeeze corporate profits and weigh on stocks. Bitcoin, for its part, has no financial results to disappoint nor a central bank to control its supply.”

Sharma thus distinguishes the potential impact of monetary tightening on listed companies from its fundamental consequences for bitcoin. “Traders may react to the same news by selling both, but in my view, a Fed rate hike changes the outlook for stocks, not the long-term thesis on bitcoin. »he continues. An immediate reaction of BTC to the Fed’s announcement would therefore not be enough, according to this reading, to determine its longer-term prospects.

Liquidations put liquidity back at the heart of concerns

The correction has already cost traders exposed to leverage dearly. According to reported data, more than $98 million in long bitcoin positions were liquidated, compared to around $45 million in leveraged short positions. Across the entire crypto market, nearly $300 million in long positions disappeared, compared to $190 million in short positions.

Lea Thompson, marketing manager at Cake Wallet, urges us to look beyond these immediate movements. “The most important signal is how the announced outlook changes expectations about real rates, dollar strength and liquidity conditions”she explains. The real issue therefore lies not only in the price reaction after the announcement, but in what it “the evolution of its macroeconomic environment”.

After the break of 77,000 dollars, the deterioration of sentiment and several hundred million dollars of liquidations on the crypto market, real rates, the strength of the dollar and liquidity conditions become the main elements put forward by the speakers cited. The reaction of bitcoin will give a first measure of the reception reserved for the Fed’s decision, its orientations will above all make it possible to assess the macroeconomic environment that the crypto market will have to face.