The crypto markets took another beating as the FOMC (Federal Open Market Committee) results were released to the public. The Federal Reserve has decided to increase interest rates by another 75 basis points. The same was reflected in the markets this morning. Bitcoin (BTC), the original cryptocurrency, is down 1.6% in the last 24 hours. While Ethereum (ETH) is down by 5.5% in the same time frame. The S&P 500 is also down by 1.71%, showing a high correlation to BTC. Nonetheless, there is talk of Bitcoin being at the bottom.
According to the market intelligence platform, Santiment, Bitcoin is showing signs of being at the bottom. The firm says that BTC’s social dominance has spiked, which has historically been a good indicator of the token being at its bottom. Moreover, negative comments surged to monthly highs. The analysis firm also highlighted that shorting on exchanges has gone down, bringing a stop to the havoc.
However, it can be argued that this time around, things might not follow the traditional patterns.
Is Bitcoin really at the bottom?
Although the signs of a bottom may be visible, there is no telling if prices will move upward from here. Firstly, the interest rate hike is a sign that investors will probably not put money into Bitcoin, or other crypto assets. This pattern will likely continue until the Federal Reserve meets its target for curbing inflation.
Secondly, Russian President Vladimir Putin has announced a partial mobilization in its war effort against Ukraine. The Russia-Ukraine war has played a big hand in the market dynamics of the moment. Oil prices went up moments after Putin announced his mobilization plans.
Deutsche Bank economists have retracted their argument for a “mild recession” as the energy crisis has worsened in Europe. They expect Europe’s GDP to fall by around 3% year-over-year between mid-2022 and mid-2023. Moreover, they even said that a “even sharper winter downturn cannot be ruled out.” Regardless of the recent decline, gas prices are still up by 100% since March.
According to reports, this winter Britons will spend an average of 10% of their income on energy, gas, heating, etc. This is twice the amount since 2021.
Considering the above factors, it could be speculated that, regardless of bottoming signs, there is no telling if prices will move upwards. Rather there is a chance that it could instead move further down.
At press time, Bitcoin (BTC) was trading at $18,714.61, down by 7.6% in the last seven days.