Bitcoin, an 'Ant Hell' Before $80,000?...Whales 'Packing Up' Ahead of FOMC

▲ Bitcoin (BTC)/ChatGPT generated image

The total market capitalization of virtual assets has fallen to the $2.54 trillion mark due to extreme caution ahead of the Federal Open Market Committee (FOMC)'s interest rate decision, leading to a massive exodus of investors.

Crypto-focused media outlet BeInCrypto reported on April 28 (local time) that the entire virtual asset market, including Bitcoin (BTC), has recorded a decline for two consecutive days, indicating a clear trend of risk aversion. The total market capitalization failed to break through the $2.63 trillion resistance level, which it had challenged three times over two weeks, and subsequently fell by 0.66% to $2.54 trillion. Traders are significantly reducing risky assets in their portfolios ahead of the Federal Reserve's (Fed) policy decision scheduled for April 29, leading to a sharp contraction in liquidity.

The market's attention is focused more on Chairman Jerome Powell's remarks than on whether interest rates will be frozen. The Chicago Mercantile Exchange (CME) FedWatch tool shows a 99% probability of interest rates being frozen between 3.50% and 3.75% at this meeting, but the nuance of Powell's final remarks before handing over the baton to incoming Chairman Kevin Warsh, who will take office on May 15, is increasing uncertainty. With inflation pressures intensifying, such as the March Consumer Price Index recording 3.3% and oil prices remaining high, a hawkish stance from Powell could further exacerbate market liquidity depletion.

Mechanical forced liquidations due to price drops are rapidly unwinding leverage within the system. Over the past 24 hours, forced liquidations of long positions totaling $281.83 million occurred across the entire virtual asset market, accelerating downward pressure. The next support level for the total market capitalization is set at $2.49 trillion, and if this level breaks, downward pressure could extend to $2.34 trillion and $2.27 trillion. Buyers are in a desperate situation, needing to defend the $2.49 trillion level and regroup to reclaim $2.63 trillion.

Bitcoin is trading within an ascending channel, having fallen over 1% to $76,812 on the 8-hour chart. However, a volume divergence was observed between April 14 and 27, where prices rose while trading volume sharply declined, indicating a lack of conviction from buyers in the recent rally towards $79,567. In particular, investors, conscious of the past pattern where prices fell immediately after 8 out of the last 9 FOMC meetings, are heavily liquidating long positions before Wednesday's meeting. Forced liquidations of long positions totaling $120.6 million in Bitcoin alone further fueled the downturn.

The sustainability of Bitcoin's short-term trend depends on its ability to defend the Fibonacci 23.6% retracement level of the ascending channel at $75,541. If the 8-hour candle closes below $75,541, there is a high risk that the price could sharply retreat to $73,050 and then to $69,024. Conversely, if it successfully establishes itself above $79,567, it will secure a new upward path towards the channel's upper boundary. As market tension is at its peak ahead of the Federal Open Market Committee's announcement, it is crucial to respond promptly to changes in key indicators.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*