All Eyes on the FOMC as Bears Prevail

The BTC/USD pair drifted downwards as demand for Bitcoin waned. 

• Sell the BTC/USD pair and set a take-profit at 28,000.
• Add a stop-loss at 31,000.
•  Timeline: 1-2 days.

• Buy the BTC/USD pair and set a take-profit at 30,500.
• Add a stop-loss at 28,000.

Bitcoin price has come under intense pressure in the past few days as traders focus on the upcoming FOMC decision and options expiry. The BTC/USD pair retreated to a low of 28,827, the lowest point since June 21st. It has dropped by more than 7.7% from its highest level this month.

Bitcoin has been left behind in a major rally that is happening in the financial market. The Dow Jones has jumped to the highest level since March 2022 while the S&P 500 and Nasdaq 100 indices have moved into a major bull run.

American stocks have jumped as investors remain optimistic about corporate earnings and the recovery of the American economy. They jumped on Tuesday after China, the second-biggest economy in the world, announced a new plan to support its businesses.

Bitcoin is underperforming mostly because the crypto market has been muted in the past few days, without major news. The most recent news came two weeks ago when Ripple prevailed in its long lawsuit against the SEC.

The next key catalyst that could move Bitcoin is the Federal Open Market Committee (FOMC) decision scheduled for later today. Economists polled by Reuters and Bloomberg have priced in a 0.25% rate hike that will push rates to the highest level in over two decades.

The Fed will likely signal the end of the tightening phase since inflation is falling at a faster pace than expected. It dropped to 3.0% in June from a peak of 9.1% in 2021.

Bitcoin will also react to the upcoming options expiry in the market. Options worth millions of dollars will expire on Friday, leading to some volatility in the crypto market.

The BTC/USD pair drifted downwards as demand for Bitcoin waned. This performance is likely because of the rotation from crypto to stocks. On the daily chart, the pair has formed a small head and shoulders pattern. It has also moved slightly below the 25-day and 50-day moving averages. Also, it dropped below the psychological level of 30,000.

Therefore, it seems like bears are taking over, which means that the pair will continue falling as sellers target the next support level at 28,000. A volume-supported move above the psychological level at 30,000 will point to more upside.

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