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Bitcoin (BTC) underwent a weak rebound on Sep. 21, and the U.S. dollar jumped to a new yearly high as investors await today's Federal Open Market Committee's interest rate decision.

BTC price hold $19K ahead of Fed decision

BTC's price has managed to cling on to $19,000 with a modest daily gain of 1.33% . Meanwhile, the U.S. dollar index (DXY), which measures the greenback's strength versus a pool of top foreign currencies, rose to 110.86, the highest level in twenty years.

FOMC rate hike scenarios

The Federal Reserve is poised to discuss how far it could raise its benchmark lending rates to curb record inflation. Interestingly, the market expects the U.S. central bank to hike rates by 75 or 100 basis points (bps).

The ramification of higher interest rates will likely result in lower appetite for riskier assets like stocks and cryptocurrencies. Conversely, the U.S. dollar will serve as the go-to safe haven for investors escaping risk-on assets.

"There seems no reason for the Fed to soften the hawkishness shown at the recent Jackson Hole symposium, and a [0.75 percentage point] 'hawkish hike' should keep the dollar near its highs of the year," analysts at ING told the Financial Times.

Prices remain soft across the market as traders await Federal Reserve Chair Jerome Powell’s statement on the size of the next interest rate hike. 

At the moment, the market consensus is a 0.75 bps rate hike and a sliver of analysts are banking on 1%.

Stocks also appear en route to close the day in the red, with the Dow down 0.75% and the S&P 500 and Nasdaq registering a 0.79% and 0.64% loss, respectively. Bitcoin (BTC) continues to fight what appears to be a losing battle at the $19,000 mark, while Ether (ETH) dug a little deeper into its post-Merge dip by making an intra-day low at $1,329.

While BTC, ETH and altcoins aren’t making any notable moves that defy the current downtrend, from the perspective of market structure and technical analysis, there are a few interesting developments occurring.

Lido (LDO) has corrected alongside Ethereum now that the Merge-trade fervor has subsided, but the asset currently trades in what some would say is a bull flag. While ETH bulls and traders might have taken profits on their long Ether positions, the Merge was a success, stakers and validators still derive yield from the altcoin and the fundamentals that turned investors bullish on Ether remain present.

Ethereum's switch to proof-of-stake (PoS) on Sept. 15 failed to extend Ether's (ETH) upside momentum as ETH miners added sell pressure to the market. 

On the daily chart, ETH price declined from around $1,650 on Sept. 15 to around $1,350 on Sept. 20, an almost 16% drop. The ETH/USD pair dropped in sync with other top cryptocurrencies, including Bitcoin (BTC), amid worries about higher Federal Reserve rate hikes.

Ethereum remains inflationary

The Ether price drop on Sept. 15 also coincided with an increase in ETH supply, albeit not immediately post-Merge. 

Roughly 24 hours later, the supply change flipped positive once more, pouring cold water on the "ultra sound money" narrative due to a deflationary environment that some proponents expected post-Merge. 

Pre-Merge, Ethereum distributed around 13,000 ETH per day to its proof-of-stake (PoW) miners and about 1,600 ETH to its PoS validators. But the rewards to miners dropped after the Merge went live by roughly 90%.

Bitcoin (BTC) recovered above the $19,000 mark on Sep. 20, a day after falling to its lowest level in three months.

Bitcoin struggles after dropping below $20K

On the daily chart, the BTC price rose from $18,255 to $19,650. This 7.5% price rebound mirrored similar rebound moves witnessed in the stock market, suggesting that investors have been coming to terms with another significant rate hike by the Federal Reserve expected on Sep. 20-21.

However, opinions differ on the longevity of Bitcoin's rebound. Independent market analyst Jonny Moe stressed that BTC's ongoing price action is similar to its sideways consolidation moves at the beginning of this year.

In other words, Bitcoin's current price rebounds around the $20,000 mark do not make a long-term bull case.

Rudy Takala, former Fox News executive and opinion editor at Cointelegraph, also warns crypto traders to prepare for more "dark times" due to worsening economic conditions globally.

Bitcoin (BTC) faced a 9% correction in the early hours of Sept. 19 as the price traded down to $18,270. Even though the price quickly bounced back above $19,000, this level was the lowest price seen in three months. However, pro traders held their ground and were not inclined to take the loss, as measured by derivatives contracts.

Pinpointing the rationale behind the crash is extremely difficult, but some say United States President Joe Biden's interview on CBS "60 Minutes" raised concerns about global warfare. When responding to whether U.S. forces would defend Taiwan in the event of a China-led invasion, Biden replied: "Yes, if in fact, there was an unprecedented attack."

Others cite China's central bank lowering the borrowing cost of 14-day reverse repurchase agreements to 2.15% from 2.25%. The monetary authority is showing signs of weakness in the current market conditions by injecting more money to stimulate the economy amid inflationary pressure.

There is also pressure from the upcoming U.S. Federal Reserve Committee meeting on Sept. 21, which is expected to hike interest rates by 0.75% as central bankers scramble to ease the inflationary pressure. As a result, yields on the 5-year Treasury notes soared to 3.70%, the highest level since November 2007.

Let's look at crypto derivatives data to understand whether professional investors changed their position while Bitcoin crashed below $19,000.

$20,000 is no longer support.

$100,000 didn’t happen.

The Bitcoin halving is 562 days away.

Bears simply refuse to release their vice grip on the market and the Federal Reserve’s policy of interest rate hikes and quantitative tightening is adding fuel to the fire.

Despite these challenges, in a Sept. 15 Twitter Space hosted by Cointelegraph, Capriole Fund founder Charles Edwards explained why he is still bullish on Bitcoin.

Ripple (XRP) price was wobbling between profits and losses on Sept. 19 despite hopes that Ripple would eventually win its long-running legal battle against the U.S. Securities and Exchange Commission (SEC).

Fed spoils SEC vs. Ripple euphoria

The XRP/USD pair dropped by over 1% to $0.35 while forming extremely sharp bullish and bearish wicks on its Sept. 19 daily candlestick. In other words, its intraday performance hinted at a growing bias conflict among traders.

The indecisiveness could be due to XRP's exposure to catalysts other than the SEC vs. Ripple lawsuit. Namely, the Federal Reserve's potential to increase its benchmark interest rates by another 75 or 100 basis points in their policy meeting on Sept. 20.

As Cointelegraph reported, fears of aggressive rate hikes have pressured the crypto market lower throughout the year, including Bitcoin (BTC) and Ether (ETH). XRP is also not immune, given the token's consistently positive correlation with Bitcoin since October 2021.

For instance, XRP's daily correlation coefficient with Bitcoin on Sep. 19 was 0.47. A reading of 1 means that the two assets move in lockstep.  

Bitcoin (BTC) and Ethereum's native token, Ether (ETH), started the week on a depressive note as investors braced themselves for a flurry of rate hike decisions from central banks, including the U.S. Federal Reserve and Bank of England.

Bitcoin price fails to hold $20,000

On Sep. 19, BTC's price has failed to regain the $20,000 psychological support zone. The BTC/USD pair slipped by 6.5% to around $18,250, while ETH dropped 4% to approximately $1,280.

Their gloomy performance came as a part of a broader decline that started in mid-August, wherein BTC and ETH wiped a total of 28% and 37% off their market valuation, respectively.

A 500 bps global rate hike ahead?

This week, the Fed and a number of its global peers will potentially attack rising inflation by further raising interest rates.

Data compiled by Bloomberg suggests that the U.S. central bank, alongside Sweden's Riksbank, the Swiss National Bank, Norway's Norges Bank, the Bank of England, and others, will raise lending rates by a combined 500 basis points, or 5%.

Bitcoin (BTC) faces another week of “huge” macro announcements after the lowest weekly close since July.

After days of losses following the latest inflation data from the United States, BTC/USD, like altcoins and risk assets more broadly, has failed to recover.

The largest cryptocurrency has yet to flip $20,000 to convincing support, and as the third full week of September begins, the danger is once again that that level could function as resistance.

The bulls have plenty to worry about — the coming days will see the Federal Reserve decide on the next key rate hike, something that will affect the market far beyond mere sentiment.

In addition, the aftermath of the Ethereum Merge continues to play out, while at defunct exchange Mt. Gox, reimbursements to creditors add another potential cloud to the Bitcoin price landscape.

The S&P 500 and the Nasdaq Composite index suffered their worst weekly performance since June as investors remain concerned that the Federal Reserve will have to continue with its aggressive monetary policy to curb inflation and that could lead to a recession in the United States.

Bitcoin (BTC) remains closely correlated to the S&P 500 and is on track to fall more than 9% this week. If this correlation continues, it could bring more pain to the cryptocurrency markets because Goldman Sachs strategist Sharon Bell cautioned that aggressive rate hikes could trigger a 26% fall in the S&P 500.

The majority expect the Fed to hike rates by 75 basis points in the next meeting on Sept. 20 to Sept. 21 but the FedWatch Tool shows an 18% probability of a 100 basis point rate hike. This uncertainty could keep traders on the edge, resulting in heightened short-term volatility.

If the Fed’s rate hike is in line with market expectations, select cryptocurrencies could attract buyers. Let’s study the charts of five cryptocurrencies that are positive in the near term.

BTC/USDT

Bitcoin recovered from $19,320 on Sept. 16 and rallied above $20,000 on Sept. 17 but the bulls are struggling to sustain the higher levels. This suggests that bears are active at higher levels.

A sequence of macro warnings coming out of the Goldman Sachs camp puts Bitcoin (BTC) at a risk of crashing to $12,000.

Bitcoin in "bottom phase?"

A team of Goldman Sachs economists led by Jan Hatzius raised their prediction for the speed of Federal Reserve benchmark rate hikes. They noted that the U.S. central bank would increase rates by 0.75% in September and 0.5% in November, up from their previous forecast of 0.5% and 0.25%, respectively.

Fed's rate-hike path has played a key role in determining Bitcoin's price trends in 2022. The period of higher lending rates — from near zero to the 2.25-2.5% range now — has prompted investors to rotate out of riskier assets and seek shelter in safer alternatives like cash.

Bitcoin has dropped by almost 60% year-to-date and is now wobbling around its psychological support of $20,000. Some analysts, including a pseudonymous trader Doctor Profit, believe BTC's price has entered the bottom phase at current levels. However, the trader warned:

"Please consider FEDs next decisions. 0.75% [rate hike] already priced in, 1% and we see blood."

Dogecoin (DOGE) may be back in the top-ten cryptocurrency by market capitalization, but its loses in both USD and Bitcoin (BTC) terms since Elon Musk's SNL appearance are considerable.

Dogecoin loses Musk-effect

The DOGE/BTC trading pair has fallen 75% after peaking out at 1,287 satoshis on May 9, 2021, a day after Musk was a guest host on Saturday Night Live, including a sketch titled “The Dogefather.”

Before his appearance, the billionaire entrepreneur was relentlessly tweeting Dogecoin memes, images, which helped DOGE — a cryptocurrency that started out as a joke — to attain a market capitalization north of $90 billion in May 2021.

That's more than 36,000% gains in just two years. But things have gone downhill ever since. 

Investors reflected hopes that even an optimistic wink from Musk on SNL toward DOGE would prompt his 106 million followers to buy the meme-token. But Musk did an unforeseeable thing: he called Dogecoin a "hustle."

BNB, the native token of Binance’s BNB Chain, entered a symmetrical triangle formation on Aug. 10, when it first faced the descending trendline at the $335 resistance. The following five weeks have been a struggle around $280, the exact intersection between the two conflicting ascending and descending patterns.

A decision on whether the symmetrical triangle will break to the upside or downside is expected by Sept. 30, when the trendlines cross. Currently holding a $45 billion total market capitalization, BNB Chain token has outperformed the broader altcoin market by 15% over the past three months.

The latest breakthrough in BNB Chain development was announced on Sept. 7, after the project introduced zero-knowledge (ZK) proof scaling privacy technology. The testnet is expected for November, aiming for faster finality and reduced transaction fees. Ethereum mastermind Vitalik Buterin also wants to implement a similar solution for the Ethereum network and he highlighted the importance of ZK in late 2021.

BNB Chain's Ethereum-compatible network is fully functional, hosting decentralized applications (DApps), including decentralized exchanges (DEXs), games, collateralized loan services, social networks, yield aggregators and NFT marketplaces.

A decline in price deposits could be a red flag

Despite currently being 60% below its -time high, BNB remains the third largest cryptocurrency by market capitalization ranking, excluding stablecoins. Moreover, the network holds $6.6 billion worth of deposits locked on smart contracts, a term known as total value locked, in the industry.

A quick flick through Twitter, any social media investing club, or investing-themed Reddit will quickly allow one to find handfuls of traders who have vastly excelled throughout a month, semester, or even a year. Believe it or not, most successful traders cherry-pick periods or use different accounts simultaneously to ensure there’s always a winning position to display.

On the other hand, millions of traders blow up their portfolios and turn out empty-handed, especially when using leverage. Take, for example, the United Kingdom’s Financial Conduct Authority (FCA) which requires that brokers disclose the percentage of their accounts in the region that are unprofitably trading derivatives. According to the data, 69% to 84% of retail investors lose money. 

Similarly, a study by the U.S. Securities and Exchange Commission found that 70% of foreign exchange traders lose money every quarter, and eToro, a multinational broker with 27 million users, reported that nearly 80% of retail investors lost money over 12 months.

The same pattern emerges in every market across different continents and decades: retail traders seldom sustain profitable operations. Still, novice and experienced investors think they can overcome that bias due to ingenuity or mass marketing campaigns from influencers, exchanges and algorithmic trading systems.

Below are the 4 culprits behind the inevitable failure of retail traders. There is no easy solution aside from a long-term mentality and dollar-cost average-based strategy of buying a fixed amount every week or month.

Presently, there seems to be a general assumption that when the U.S. dollar value increases against other global major currencies, as measured by the DXY index, the impact on Bitcoin (BTC) is negative.

Traders and influencers have been issuing alerts about this inverse correlation, and how the eventual reversal of the movement would likely push Bitcoin price higher.

Analyst @CryptoBullGems recently reviewed how the DXY index looks overbought after its relative strength index (RSI) passed 78 and could be the start of a retrace for the dollar index.

Moreover, technical analyst @1coin2sydes presents a bearish double top formation on the DXY chart, while simultaneously Bitcoin forms a double bottom, a bullish indicator.

Correlation changes over time, despite the general inverse trend

The periods of inverse movements between Bitcoin and the DXY index have never exceeded 36 days. The correlation metric ranges from a negative 1, meaning select markets move in opposite directions, to a positive 1, which reflects a perfect and symmetrical movement. A disparity or a lack of relationship between the two assets would be represented by 0.

Ethereum's native token Ether (ETH) has been forming an inverse-cup-and-handle pattern since May 2021 on the weekly chart, which hints at a potential decline against Bitcoin (BTC). 

An inverse cup-and-handle is a bearish reversal pattern, accompanied by lower trading volume. It typically resolves after the price breaks below its support level, followed by a fall toward the level at a length equal to the maximum height between the cup's peak and the support line.

Applying the theoretical definition on ETH/BTC's weekly chart presents 0.03 BTC as its next downside target, down around 55% from Sept. 16's price.

Can ETH/BTC pull a Dow Jones?

Alternatively, the ETH/BTC pair could nevertheless deliver some large gains in the years to come.

On the weekly log chart, the ETH/BTC pair is painting a potential cup-and-handle since January 2018. In other words, a rally toward 0.5 BTC in 2023 is on the table, up more than 520% from current price levels.

The Ethereum Merge came and went, leaving investors to ponder what the next trending development in the market could look like. In a Cointelegraph Twitter Space with Capriole founder Charles Edwards, the analyst mentioned that excitement over the Ethereum Merge and its bullish price action had somewhat been holding up hope across the market. Now that the event has come and gone, the crypto market has been selling off, with Bitcoin’s (BTC) price trading below $20,000 and Ether’s (ETH) under $1,500. 

Eventually, new narratives and market trends will emerge, and if the fundamentals are right, traders will rotate funds as these new leaders emerge.

Let’s take a look at a few potential trends.

Where will the former ETH miners go?

The Ethereum network successfully shifted to a proof-of-stake (PoS) model, meaning miners are out of pocket but still possibly in possession of their GPUs and ASICs mining infrastructure. It’s possible that some miners might elect to mine on a different chain instead of selling their gear.

While they haven’t settled on any particular chain just yet, Ravencoin, Flux, Ethereum Classic and Ergo seem to be the frontrunners. Leading into the Merge, each network saw its hash rate rise to new all-time highs, as shown below.

Bitcoin (BTC) exchanges have seen huge volumes this month as price declines lead to renewed interest in trading.

Data from sources including on-chain analytics firm Glassnode shows exchange inflows hitting their highest since March 2020.

"The scent of volatility is in the air"

On Sept. 14, over 236,000 BTC made its way to the 1 major exchanges tracked by Glassnode.

This was the largest single-day spike since the chaos that surrounded Bitcoin’s dip to just $3,600 in March 2020.

The sell-offs in May 2021 and May and June this year failed to match the tally, suggesting that more of the Bitcoin investor base is currently aiming to reduce exposure.