Ethereum’s Sentiment Drops as FOMC Meeting Nears

After experiencing considerable momentum, Ethereum’s sentiment has dropped as the Federal Open Market Committee (FOMC) meeting edges closer, according to Santiment.

The market insight provider explained:

“Ethereum had an up and down Sunday, jumping above $1,640 before dipping back down to $1,540. The trading crowd continues to not believe the hype, and is expecting prices to fall heading into the FOMC meeting. ETH should continue to stay volatile.”


Source: Santiment 

As part of the Federal Reserve (Fed), the FOMC determines the direction monetary policy will take, and it has resorted to interest rate hikes in the recent past. For instance, the interest rate was increased by 75 basis points (bps) last month, the highest surge in 28 years.

With the FOMC meeting slated for July 27, all indicators are that the interest rate might experience a similar hike. Mike McGlone, a senior Bloomberg Intelligence commodity strategist, recently stated:

“The Fed is using a sledgehammer on commodities and risk assets. Down about 20% since the June 75 bps rate-hike, the aftermath of another 75 in July may be similar for the three C’s – crude oil, copper, and corn. The stock market may be more vulnerable than crude.”

Meanwhile, crypto analyst Ali Martinez noted that Ethereum should hold $1,550 to avoid a pullback because it is a significant support level. He pointed out:

“Transaction history shows that Ethereum formed a significant demand wall at $1,550, where more than 586,000 addresses had previously purchased nearly 5.1 million ETH. Failing to hold above this vital support level could trigger a correction to $1,300.”

The second-largest cryptocurrency was down by 4.95% in the last 24 hours, with a price of $1,522 during intraday trading, according to CoinMarketCap

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Crypto Markets Surges above $1T in Valuation, What Lies Ahead?

For the first time in about a month, the combined crypto market capitalisation climbed back up above the $1 trillion benchmark.


There has been a massive upsurge sweeping through the cryptocurrency ecosystem since the start of the week as retail investors are capitalising on a predominant bullish sentiment in the industry.

The general crypto market cap was pegged at  $1,065,628,469,022.754 at the time of writing as fueled by the massive growth in the price of Bitcoin (BTC), and Ethereum (ETH), respectively. While Bitcoin was up over 6% to $23,385, over the past 24 hours, Ethereum has printed as much as $1,561 in price, up over 3% within the same time frame.

Market bulls, particularly those holding onto their bags, will feel somewhat relieved with this trend as it signifies that the digital currency ecosystem can receive a rejuvenation even without any notable fundamental driving the bullish sentiments.

With Bitcoin growing to its highest point in a month after slumping as low as its 18-month performance last month, speculations are now mounting concerning the likelihood of the industry slowing and easing out of the menacing crypto winter.

The Worst Days May Still be Ahead

Without sounding so pessimistic, the current surge in crypto prices is likely a natural bullish correction after the encompassing market slump that stretched several weeks.

Some of the most pivotal events are still ahead, including the US Federal Open Market Committee (FOMC) scheduled for the end of this month. With inflation notably higher than projected, the Feds may be forced to raise interest rates again, likely more than the 75 basis points recorded the last time, all in a bid to curtail the inflation rate.

Should this happen, the stock market is bound to react in a way that might offset this current growth in the digital currency ecosystem. While the gravity cannot yet be forecasted, there is a likelihood that the industry is not yet out of the woods, and while the omen remains good, the crypto winter may be far from being over now.


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Markets Slump In Wake of Fed Meeting

Key Takeaways

  • Crypto markets briefly rose today before taking a sharp dive in the wake of the Fed’s FOMC meeting today.
  • Bitcoin and Ethereum enjoyed significant gains on the day before they were erased this afternoon.
  • The Fed’s insistence on rate hikes may have put fear in some investors.

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The Fed will stick to its plan of raising interest rates in March, according to the report from this week’s Federal Open Market Committee meeting, released today. Although the move comes as no surprise, markets are rattled all the same.

Fed Rate Hikes On the Way

Crypto and traditional markets alike have slumped in the wake of today’s FOMC meeting report and Fed Chair Jerome Powell’s corresponding press conference.

The Federal Open Market Committee announced that while it would not be recommending a raise in interest rates immediately, it would stick with the tapering plan it publicized last December—effectively ending its asset purchases in by early March and raising interest rates. 

Both Bitcoin and Ethereum ticked up in price in the minutes leading up to the 2:00 PM EST FOMC announcement, and then jumped more in the minutes after. Bitcoin jumped from just shy of $38,000 at 1:59 to nearly $38,750 at 2:09—Ethereum’s price action told a similar story. 

However, the positivity was short lived, as both assets started to fall in the lead up to Fed Chairman Powell’s Q&A session set for 2:30 EST. At press time both coins had erased their gains for the day. Stocks followed a similar pattern: both the Nasdaq and Dow Jones Industrial Average took sharp dives after Powell spoke.

Chair Powell emphasized that the Congressionally-mandated monetary goals for the Fed were full employment and price stability. He stressed that its primary way of achieving those goals was to modulate interest rates. The question of how much rates will rise (0.25% seems expected), though, seems to have spooked investors.

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies. 

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Bulls aim to turn the tide in Friday’s $580M options expiry after BTC tops $43K

Bitcoin (BTC) investors seem uncomfortable with adding positions after the most recent 40% correction from the $69,000 all-time high made on Nov. 10. In addition to the prolonged downtrend, remarks from the United States Federal Reserve on Dec. 15 about rising interest rates are also weighing on risk-on assets.

The Fed signaled that it could raise its benchmark rate three times this year and there are plans to increase the pace of its asset purchasing taper.

Consequently, traders are worried that these plans will negatively impact traditional and crypto markets because liquidity will no longer be “easily” available.

Bitcoin price at Coinbase, USD (right) vs. China stock market MSCI index (left)

Cryptoasset regulation in the U.S. has recently been in the spotlight and recently a member of the Securities and Exchange Commission’s Investor Advisory Committee called for the agency to open public comments regarding digital asset regulation.

On Jan. 18, associate law professor J.W. Verret addressed the petition to SEC Secretary Vanessa Countryman and according to Verret, the current path the SEC is taking seems not to recognize that digital assets do not fit within the regulatory framework designed for equity investments.

The professor also questioned what requirements the SEC would consider in approving a Bitcoin spot exchange-traded fund.

$590 million in options expire on Friday

Even though Bitcoin is said to be correlated to traditional markets, BTC derivatives traders were not expecting sub-$44,000 prices according to the Jan. 21 options expiry. Friday’s $590 million open interest will allow bears to score up to $82 million if BTC trades below $41,000 during the expiry.

Bitcoin options aggregate open interest for Jan. 21. Source:

At first sight, the $380 million call (buy) options vastly surpass the $210 million put (sell) instruments, but the 1.81 call-to-put ratio is deceptive because the recent price drop will likely wipe out most of the bullish bets.

There is no value in the right to buy Bitcoin at $44,000 if it is trading below that price. Therefore, if Bitcoin remains below $44,000 at 8:00 am UTC on Jan. 21, only $64 million of those call (buy) options will be available at the expiry.

Bears are comfortable with Bitcoin price below $42,000

Here are the four most likely scenarios for Friday’s $590 million options expiry. The imbalance favoring each side represents the theoretical profit. In other words, depending on the expiry price, the active quantity of call (buy) and put (sell) contracts varies:

  • Between $40,000 and $41,000: 30 calls vs. 3,320 puts. The net result is $132 million favoring the put (bear) options.
  • Between $41,000 and $42,000: 170 calls vs. 2,180 puts. The net result is $82 million favoring the put (bear) instruments.
  • Between $42,000 and $44,000: 1,480 calls vs. 1,130 puts. The net result is balanced between call and put options.
  • Between $44,000 and $45,000: 2,980 calls vs. 630 puts. The net result favors call (bull) instruments by $103 million.

This crude estimate considers put options being used in bearish bets and call options exclusively in neutral-to-bullish trades. However, this oversimplification disregards more complex investment strategies.

Bulls need $44,000 to bag a $103 million profit

Regulatory uncertainty and Federal Reserve monetary policies might be reasons for the recent market weakness, but a mere 5% price pump from the current $42,000 level is enough for Bitcoin bulls to profit $103 million in Friday’s expiry.

However, if the current short-term negative sentiment prevails, bears could easily pressure the price below $41,000 and pocket $132 million gains.

Currently, options markets data slightly favor the put (sell) options, but the outcome is yet to be seen.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.