- Bitcoin reached $35,500 as the FOMC meeting ended in a favorable decision for the market
- Long positions were targeted at $42,697 as technical indicators point to continued price appreciation
After Bitcoin [BTC] struggled to recover $35,000 earlier, debate arose among market players about a possible plunge. One reason for this fear was that many thought the market had made enough gains for large-scale profit taking to start in November.
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Balanced rates, rising values
Contrary to speculation, that was not the case. According to Santiment, the Federal Open Market Committee’s (FOMC) decision to keep interest rates stable between 5.25% and 5.50% was crucial for BTC’s jump to $35,500.
The FOMC is a branch of the US Federal Reserve system. The committee meets eight times a year to discuss monetary policy, labor conditions, economic growth and price stability. Typically, this outcome of the meeting tends to increase Bitcoin’s volatility, regardless of whether interest rates rise or not.
🇺🇸🎙️ #JeromePowell‘S #FOMC speech ended 1 hour ago, and the #Fed keeps rates stable between 5.25% and 5.50%, as they have been since July. #Crypto climbed during the speech, and $BTC has reached $35.5K for the first time since May 2022. 🎉 https://t.co/vFfusjYdLD pic.twitter.com/V2DKBgUUBV
— Santiment (@santimentfeed) November 1, 2023
Details from Yahoo Finance showed that Fed Chairman Jerome Powell gave reasons for the decision to hit the pause button on interest rates. One of Powell’s key conclusions was that the committee is committed to pushing inflation up to 2%.
About the latest resolution he said:
“Inflation has declined since the middle of last year and the numbers over the summer have been quite favorable.”
Powell further explained that,
“But a few months of good data are just the start of what it takes to build confidence that inflation will fall sustainably.”
Traders are looking beyond $40,000
In addition to the price increase, Bitcoin open interest also increased as a result of the FOMC decision. The Open Interest is the number of open long and short positions on the derivatives market.
As Open Interest increases, so does the volatility, liquidity and attention paid to the asset.
When the metric decreases, it indicates something else. At the time of writing, Coinglass data showed that Bitcoin was too Open interest rose to significant levels, as shown below.
Source: Coinglass
Also, a rising Open Interest alongside an uptrend indicates sufficient strength for price action. If the indicator falls when the price rises, this is a sign of decreasing power for the currency. So it is likely that the Bitcoin price will continue to rise.
The data above shows that traders are targeting $42,697 in the short to medium term.
However, BTC may need much more than rising open interest to reach the price mentioned above. Therefore, it is necessary to look at the technical prospects.
Bears are far away
According to the daily chart of BTC/USD, the distance between the Bollinger Bands (BB) widened. The BB is responsible for monitoring volatility. Sometimes it also gives the idea that a cryptocurrency is oversold or overbought.
As mentioned earlier, volatility was now extreme. This means that there can be significant price fluctuations towards the upside down or disadvantage. However, the accumulation/distribution line (A/D) has also increased.
The status of this indicator means that there was significant buying pressure. If the pressure stays in the same direction, BTC could drive into $40,000 direction.
Source: TradingView
Another indicator considered in the chart above is the Directional Movement Index (DMI). The DMI indicates the possible direction a crypto is likely to take. At the time of writing, the +DMI (green) was 39.36, while the -DMI (red) was 4.28.
This stark difference explains how buyers have complete control over the market. So, it is very unlikely that the price of BTC will take a nosedive anytime soon.
This claim was also validated by the Average Directional Index (ADX). At the time of writing, the ADX was 60.62, indicating strong upside for Bitcoin.
The initial fear disappears
In addition, data about the chain strengthens the idea of ​​renewed optimism in the market, thanks to the Weighted Sentiment metric.
The Weighted Sentiment maps the perception of market participants.
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When this metric spikes, it means that most messages are positive at the same time. Conversely, a notable decline in the benchmark means vanishing optimism.
At the time of writing, weighted sentiment had shot up to 0.83. Therefore, much of the market expects the Bitcoin price to continue its upward trend unless it is halted by a comprehensive sell block order.
Source: Santiment