Bitcoin (BTC) dipped below $19,000 again on Oct. 21 as rumors swirled about the US Federal Reserve.
The Fed remains on track for a major rate hike in November
Data from Cointelegraph Markets Pro and TradingView showed the BTC/USD pair fell sharply ahead of the Wall Street open, hitting lows of $18,660 on Bitstamp.
A recovery sent the pair higher, and it was attempting to reclaim $19,000 as support at press time.
The action occurred while commentators affirmed that the Fed was easing its rate hike policy ahead of the November 1-2 Federal Open Market Committee (FOMC) meeting.
Citing quotes from Fed officials in the mainstream media, they suggested the November hike could be the last 75 basis point adjustment, to be followed by smaller ones.
“Some officials are more willing to calibrate rate setting to reduce the risk of excessive tightening”, summarized Nick Timiraos, chief economics correspondent for the Wall Street Journal.
“But they won’t want to drastically ease financial conditions if and when they raise 50 bps (instead of 75). This meeting could allow officials to align on next steps.”
Timiraos was skeptical after his remarks, with some accusing him of “leaking” data that would be sensitive to markets.
“How silly that there is a Fed-appointed leaker who can launch a well-timed tweet thread and instantly impact global markets”, wrote the popular commentator Stack Hodler.
“Imagine the chaos if someone hacked into this guy’s account and leaked a 100bp increase. Yields skyrocket and we have UK pension crisis 2.0 – what a chaotic monetary system.”
According to CME Group’s FedWatch tool, the odds of a 75 basis point rise next month remained almost guaranteed, with only a 6.2% chance of 50 basis points.
The dollar retreats after the yen sealed more lows
US equities started the day with confidence, while the dollar quickly lost ground after causing further pain in the currencies of its trading partners.
The US Dollar Index (DXY) was below 113 at the time of writing, having reached around 114 hours earlier.
“It’s all about the DXY and the consolidation between the recent highs and the D1 uptrend”, explained popular cryptocurrency trader and analyst Pierre, citing the above analysis.
In a sign of how problematic the dollar’s rally was becoming, the Japanese yen weakened past the psychological 150 mark, a 32-year low.
“Unless the Bank of Japan relents on suppressing bond yields, the yen will continue to slide. The yen has broken above 150”, forecast Alasdair Macleod, head of research at Goldmoney.
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