Bitcoin price were lower ahead of the Federal Reserve’s two-day meeting this week

Bitcoin price was rejected by a long-term resistance line last week and created a bearish engulfing candlestick. The price is at risk of breaking down from a long-term horizontal support area. It all happened before the U.S. Federal Reserve’s upcoming monetary policy meeting. The central bank is expected to raise interest rates by another three-quarter of a point, though investors are also watching for guidance about corporate earnings before the next reporting season begins in October.

Bitcoin price at risk of falling to multi-year low after likely interest rate hike

The Federal Open Market Committee (FOMC) will meet on Sept. 20 and 21 in order to discuss how to tackle the inflation issue. So far, the FOMC has raised federal fund rates by 25 basis points (bps) in March 2022, by 50 bps in May, and finally by 75 bps in June. Currently, there is an 82% probability of a 75-basis points bps rate hike and an 18% chance of a 100-bps rate hike. These would increase the target rate to 300-325 or 325-350, respectively.

If you look at prior periods of high inflation and FED rate hiking cycles, there is actually plenty of evidence that the bottom will not be in until the FED gets close to the end of their next round of rate cuts, rather than rate hikes. However, there are some instances in history, when the SPX bottomed near when rate hikes ended.

BTC has been falling since reaching an all-time high price of $69,000 in November 2021. The downward movement has so far led to a local low of $17,622 in June 2022. Additionally, BTC is at risk of breaking down below the $19,000 horizontal support area. Since the area coincides with the yearly lows, a breakdown below it could cause a swift drop to new lows.


BTC/USD 4-hour chart | Source: TradingView

At the present time, the traditional market is also falling fiercely. Futures tied to the broad market index were down 0.6% in premarket trading. Dow Jones Industrial Average futures were 0.53%, or 179 points, lower, while Nasdaq 100 futures fell 0.74%.

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