Bitcoin Awaits Fed

The latest moves in crypto markets, in context

Edited by Omkar Godbole

November 3, 2021

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Bitcoin (BTC)

-0.6% $63,000

Ether (ETH)

+2.4% $4,560

(Price data as of November 3 @ 11:15 UTC)

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Good morning, Here's what's happening this morning:

Market Moves: Bitcoin Awaits Fed

Technician's Take: SHIB's Breakout Fails

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Market Moves

by Omkar Godbole

While bitcoin, ether and U.S. stock futures were trading flat ahead of the conclusion of a much-anticipated Federal Reserve (Fed) meeting, native tokens of Ethereum rivals like Solana, Terra, Avalanche and scaling solution Loopring scored gains. Surging transaction costs on Ethereum forced investors to look more closely at cheaper options.

Later Wednesday, the Fed is likely to announce the beginning of the so-called taper or gradual unwinding of liquidity-boosting asset purchases program.

Last month, analysts told CoinDesk that the taper is factored in and doesn't pose a significant risk to asset prices. That said, in recent weeks, bond traders have aggressively priced in prospects of an early interest rate hike, tracking rising inflation.

So, traders are likely to scan the Fed statement to see if the central bank still sees inflation as transitory. Fewer references to the word transitory might imply growing discomfort with price pressures and validate rate hike fears, bringing some selling pressure to equities and crypto markets.

It's anybody's guess whether the Fed will retain its view that high inflation is transitory, but easing supply chain bottlenecks suggest the central bank has the room to do so.

Google search value for the term "Buy SHIB" (Source: GoogleTrends)

The baltic dry index, which measures the cost of shipping raw materials like iron ore, steel, cement worldwide, has fallen almost 40% since early October.

According to RBC Capital markets, the WCI Composite Freight Benchmark rate measuring the cost of a 40-foot shipping container dropped over 9% from $10,500 in September to about $9,500 in October.

If the Fed downplays the inflation scare, fears of an early rate hike will likely subside, opening the doors for a continued bull runs in stocks, bitcoin and ether.

Fed's ultra-low rates and record money printing since March 2020 have triggered unprecedented risk-taking across all corners of global markets. So, monetary tightening is widely considered bearish for risk assets.

While bitcoin is perceived as digital gold, the cryptocurrency tends to attract hedging bids mainly during risk-on environment in traditional markets.

Also Read:

Bitcoin Whale Holdings Reach 2021 High Amid Inflation Fears

Technician's Take

by Omkar Godbole

SHIB Under Pressure

The failed breakout seen on the dog-themed cryptocurrency shiba inu's four-hour chart suggests the path of least resistance is to the downside.

Chart analysts consider failed breakouts as powerful bearish signals.

SHIB's 4-hour chart (Source: TradingView)

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BOLO

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ICYMI

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What will 2022 bring? Crypto 2022 is CoinDesk’s ambitious effort to scope out what’s next. This week it's Policy Week, a week devoted to exploring the complex ways governments are interacting with the cryptocurrency ecosystem, and how policy decisions or lack thereof will affect the year ahead. Read more here.

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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.

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