Bulls and Bears in the Bitcoin (BTC) market have been fighting hard ahead of the key FOMC meeting set for later today, Wednesday, May 4. The Federal Reserve is likely to raise interest rates by 50 basis points amid rising inflation.
As a result, the United States equity market has been shaky, as has the crypto market. Bitcoin has been fluctuating around $38,000 levels in the last 24 hours. Bitcoin has been unable to gain traction in either direction over the last week.
According to Glassnode, an On-chain data provider, the ownership structure and fundamentals of Bitcoin have been changing at intervals. There are also some significant divergences at play. According to Glassnode,
“Bitcoin Long-Term Holders continue to capitulate, with a huge divergence between their purchase price (blue) and their selling price (pink). This is the largest LTH capitulation in Bitcoin history”.
Bitcoin and Ethereum Address Activity Is Increasing
While the BTC price has been under pressure, the number of “daily active addresses” has increased. We can see how the “base” network activity for Bitcoin continues to expand in the chart below from Santiment.
Ethereum (ETH), on the other hand, has been following a similar path. Since the beginning of the year, Ethereum has been tracking the Bitcoin price correction. The price of ETH has been holding at around $2,800 for the past week.
The collapsing wedge is getting tighter and tighter on the ETH/USD price chart. Thus, we’ll probably witness an upside breakout in the coming days.
Both Bitcoin and Ethereum are undergoing a big “stress test” as a result of recent market swings ahead of the FOMC meeting. Abraham Chaibi, the co-founder of quantitative crypto trading business Dexterity Capital, told MarketWatch:
“Without a clear trigger from the FOMC meeting [on Wednesday], I would expect further consolidation [for bitcoin] as options sellers try to earn a yield shorting volatility. My guess is that 50bps is not going to be the trigger, because we’ve all seen this coming. Instead, any longer-term forecasts from Powell — namely anything that signals that inflation is already pulling back and that the Fed might take an easier stance on future hikes — could have a more significant impact”.
