The leading cryptocurrency remains below $70,000, and altcoins continue to trade relatively flat. Fed week has begun, and as in previous Fed decision weeks, volatility is likely to remain strong until the end of the day on Wednesday. What is expected for BTC and altcoins this week?
Risk of Increased Volatility
According to CoinGlass data, a new liquidity hunt story may unfold in the exchanges. Despite Friday’s shake-up, cryptocurrencies remained relatively calm over the weekend, focusing on Wednesday. A crypto analyst reviewed the order books and said:
“There is little change in the spot order books. Liquidity is tightening between $70,500 and $71,000. Bid liquidity is strengthening around $68,500 to $68,000. The market response to sweeping both sides of the order book will be important for early-week reversals or ongoing trades.”
Poppe mentioned that BTC/USD is “consolidating between two key levels” and that caution might continue due to the CPI and interest rate decision week.
CPI and Interest Rate Decision
We will see two major events on the same day. The Fed’s comments based on the latest data and Wednesday’s May inflation data are eagerly awaited. Generally, such intense periods on the macro front bring significant ups and downs. The Kobeissi Letter wrote that everyone will focus on the Fed. An analyst known by the pseudonym CrypNuevo wrote:
“Scenario 1: Retrace the Non-Farm Payroll movement at the start of the week, consolidate until the FOMC ends, aggressive FOMC movement, and then retrace the FOMC movement.
Scenario 2: The FOMC salvages the Non-Farm Payroll movement (decline). Until then, we simply consolidate and sweep the lows. However, when economic data shakes the market, remember that these movements tend to retract later. The same situation applied to the Non-Farm Payroll movement two days ago.”
Daan Crypto Trades indicated that weekly closes above the 2021 peak might suggest we have left the possibility of deeper lows behind. We had seen a similar close before, but after a long consolidation period, its repetition in this environment, which has energy for more upside, is motivating.
