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▲ Bitcoin (BTC)/ChatGPT generated image
The total market capitalization of virtual assets has fallen to the $2.54 trillion level due to extreme caution ahead of the Federal Open Market Committee (FOMC)'s interest rate decision, leading to a massive exodus of investors.
Crypto media outlet BeInCrypto reported on April 28 (local time) that the entire virtual asset market, including Bitcoin (BTC), recorded a decline for two consecutive days, indicating a clear trend of risk asset aversion. The total market capitalization fell by 0.66% to $2.54 trillion after failing to break the $2.63 trillion resistance level, which it had challenged three times in two weeks. Liquidity is rapidly shrinking as traders are largely de-risking their portfolios ahead of the Federal Reserve (Fed)'s policy decision scheduled for April 29.
The market's attention is focused more on Chairman Jerome Powell's remarks than on whether interest rates will be frozen. The Chicago Mercantile Exchange (CME) FedWatch tool indicates a 99% probability of interest rates being frozen between 3.50% and 3.75% at this meeting. However, the nuance of Powell's final remarks before handing over the baton to incoming Chairman Kevin Warsh, who will take office on May 15, is increasing uncertainty. In a situation where inflationary pressures are intensifying, such as the March Consumer Price Index recording 3.3% and oil prices remaining high, if Chairman Powell adopts a hawkish stance, market liquidity depletion is expected to deepen further.
Mechanical forced liquidations due to price declines are rapidly removing leverage from the system. Over the past 24 hours, long positions totaling $281.83 million were forcibly liquidated across the virtual asset market, accelerating downward pressure. The next support level for the total market capitalization is set at $2.49 trillion, and if this level breaks, downward pressure could extend to $2.34 trillion and $2.27 trillion. Buyers are in a desperate situation where they must defend the $2.49 trillion level and regroup to reclaim $2.63 trillion.
Bitcoin is trading within an ascending channel, having fallen over 1% to $76,812 on the 8-hour chart. However, a volume divergence was observed between April 14 and 27, where prices rose while trading volume sharply decreased, demonstrating a lack of conviction from buyers in the recent rally towards $79,567. In particular, investors, mindful of past patterns where prices fell immediately after 8 out of the last 9 FOMC meetings, are heavily liquidating long positions before Wednesday's meeting. Forced liquidations of long positions totaling $120.6 million in Bitcoin alone fueled the downtrend.
The short-term trend of Bitcoin depends on whether it can hold the Fibonacci 23.6% retracement level of the ascending channel at $75,541. If an 8-hour candle closes below $75,541, there is a high risk that the price could sharply retreat to $73,050 and then to $69,024. Conversely, if it successfully settles above $79,567, it will secure a new upward path towards the channel's upper boundary. As market tension is at its peak ahead of the Federal Open Market Committee's results announcement, it is crucial to respond promptly to changes in key indicators.
*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*
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