Bitcoin price rises ahead of Fed interest rate decision. Brace for volatility.

Analyst Wael Hammad from brokerage firm XS.com said: “Some relative stability in the cryptocurrency market, led by Bitcoin, which settled near the $27,000 level.” “All market sectors are looking forward to the upcoming decision of the Federal Open Market Committee.”

Cryptocurrencies – e.g

Dow Jones Industrial Average

And

Standard & Poor’s 500

– They are preparing to move against the backdrop of the Federal Reserve’s next interest rate decision, scheduled for 2 p.m. ET.

The central bank is expected to keep borrowing costs steady, with focus on its next move in November, as expectations remain in flux over whether there will be another rate hike or whether financial conditions are now tight enough to rein in inflation. The price environment remains key for Bitcoin, which has been under intense pressure since the Federal Reserve began its tightening cycle last year. Higher returns on risk-free cash tend to reduce demand for riskier bets like cryptocurrencies.

There is potential for a spike in volatility around the Fed’s decision, with traders stacking bullish bets on Bitcoin in the perpetual futures market, the most liquid market in all cryptocurrencies, and full of leverage, or borrowed money.

Bitcoin open interest — the amount of capital locked into active futures contracts — on Binance, the world’s largest cryptocurrency futures marketplace, rose for the third day in a row to $3.3 billion, according to data from Coinglass, with bets trending strongly upward. With so much leverage in bets that prices will rise, a hawkish move from the Fed could spook traders and trigger a cascade of selling, sending Bitcoin prices violently lower as leveraged traders’ positions are wiped out.

Beyond Bitcoin,

ether

The second-largest cryptocurrency was trading less than 1% in the red at $1,640. Micro tokens, or altcoins, have been mixed in with

Cardano

Down less than 1% and

ribbed

Up 1% Memecoins muted, with

Dogecoin

Slightly less than flat however

Shiba Inu

An increase of less than 1%.

Write to Jack Denton at [email protected]