Key Levels to Watch as Bitcoin Price Approaches September FOMC Meeting
Bitcoin price stayed at around $77,005 prior to the September FOMC meeting while traders continued to reduce risk and worry over the Federal Reserve and inflation. There was broad market crypto selling and a decline of 2.01% to $2.65 trillion over the last 24 hours. Ether traded around $2,420, XRP and Solana were found at about $1.36 and $99.31 respectively.
U.S. PPI Inflation Reached 5.4%
Inflation of U.S. producers reached 5.4% in August as economists predicted 5.3%. The inflation of U.S. core producers also reached its highest point since June 2021, at 4.6%.
Producer inflation readings reaching higher levels of expectations create considerable concern for markets. Market expectations are that the Federal Reserve will adopt a prolonged restrictive policy, or, even more concern, that the Fed will consider even higher interest rates.
Fed Rate Hike Expected to Reach 2
The Federal Open Market Committee (FOMC) meeting is scheduled for September 15–16. The policy statement will be the following day, September 16.
Based on the data published by the CME FedWatch, traders have placed a 69.8% probability for a 25-basis point rate hike. This probability was in the opposite direction the previous week, with 30.2% probability for no change.
A 25-basis point increase will push the target range from 3.50%–3.75% to 3.75%–4.00% This is a significant difference compared to the last week when the probability of no change was 50.6%.
With higher interest rate expectations, Bitcoin may experience pressure due to a decrease in demand for high-risk assets due to tighter monetary policy. With this in mind, Treasury yields, inflation, and the Federal Reserve may continue to be important drivers for BTC price volatility.
Bitcoin ETFs See $46.65 Million Outflow
Bitcoin ETFs experienced a $46.65 million net outflow on September 8, which ended a streak of three consecutive days of net inflows. It seems institutional investors are showing caution prior to the upcoming meeting of the Federal Reserve.
Spot Ethereum ETFs also experienced a $24.29 million net outflow during that same session, while Fidelity’s FETH recorded almost $9.89 million of inflows, creating some demand in the Ethereum ETF market.
Will Bitcoin Hold $76,000 Support?
Bitcoin hit support at around $76,976, a 0.99% decline, and sellers tested nearby support. The 4H also shows $76,000 as a short term support level.
A breakdown of $76,000 will open Bitcoin to sell off to the support levels of $74,000 and $72,500. The MACD is still bearish and the RSI is at 30.95, showing Bitcoin is approaching oversold levels.
If $76,000 support is held, then Bitcoin will attempt a recovery to the resistance zone at $78,000. A breach of this resistance could propel Bitcoin to new highs at $80,000 and $82,000.
Bitcoin Price Outlook Leading Up to September FOMC
Bitcoin has been moving unusually over the past few weeks as the markets gear up to hear from the Fed around the September FOMC meeting. Rising PPI, faster expected Fed rate hikes, and Bitcoin ETF outflows have increased shorts. There is a critical level of support around $76,000. If this level is lost, we can expect more downside. On the other hand, if Bitcoin moves to the upside and clears the $78,000 level, this could provide some positive technicals for the short term.
