• BTC flashed bearish signals ahead FOMC meeting. 
• Despite short-term caution, analysts remained bullish in the mid-term. 

Bitcoin [BTC] led the crypto market with notable de-risking ahead of the Fed rate decision as analysts prepared for a possible ‘hawkish cut.’ 

The cryptocurrency declined from an all-time high of $108K to $103K just hours before the FOMC meeting. Markets had priced in another 25bps interest rate cut.

But analysts expected a ‘hawkish tone’ due to the sticky U.S. inflation, which could affect the Fed rate path into 2025.

A similar outlook was shared by crypto trading firm QCP Capital. The firm noted, 

“The tone may be slightly hawkish, with inflation stabilizing above 2% and a strong labor market keeping the Fed cautious.”

What’s next for BTC?

The firm added that the BTC chart flashed bearish signs, including an evening star, a signal of potential trend reversal. 

“The technical outlook for BTC also appears cautious, with BTC printing an evening star on the daily timeframe and exhibiting bearish divergences.” 

For the unfamiliar, the evening star is a bearish reversal candlestick pattern involving three candlesticks; a large bullish one, followed by a smaller and finally a large bearish candle.

This suggested that a BTC crash could be likely in the short term.

Interestingly, options traders have been cautious since last week. They preferred hedging for potential price declines through put options than chasing price rallies as they did in prior weeks.  

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Author: Benjamin Njiri