Bitcoin prices rallied on Wednesday night alongside tech stocks. Prices plunged on early Wednesday morning below $19,000 thanks to the US dollar hitting a 20-year high on the back of increasing recession fears and the market’s bets on an increasingly hawkish Fed. However, Wednesday evening saw the price of the cryptocurrency bounce back above $19,000 as the global markets took a break from the sustained selloff. The cryptocurrency is currently at $19.235, up 2.96% on the day

As Bitcoin closely follows macro factors, part of its supporting factors includes the recent release of the Fed Beige Book, which has indicated that firms have been seeing some easing in labour shortages and price pressures. 

Post-Market

Bitcoin is down over 58% year-to-date (YTD), and recession fears and an inflationary environment continue to dominate the market. The US Fed is expected to continue its hawkish stance, with a 75-point rate hike expected at the coming Fed meeting in late September. Bitcoin prices, meanwhile, remain pressed under $20,000, with a current 0.77 call-to-put ratio on a September 9 options expiry. A majority of puts lie below a $19,000 strike price. Meanwhile, bulls need to push BTC above $20,000 to avoid a $130 million loss.

“The macro environment also continues to prove difficult with the dollar continuing to put in highs. This impacts all risk assets as we can see,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC.

For traders already watching Fed movements and other macro factors, there’s one more factor to consider: Ethereum 2.0. The blockchain is having its largest update yet and moving to a proof-of-stake model that will greatly increase its efficiency. Analysts are already predicting that Ethereum might overtake Bitcoin as the largest cryptocurrency by value – forcing BTC to consolidate as ETH takes off. 

Investors are now advised to continue paying close attention to the coming speech by Fed Chair Jerome Powell, which will be made at 16:10 (GMT+3) on Thursday, 8 September. Hints or signals given during the speech will likely impact the movement of the US dollar – and in turn, move BTC as risk sentiment changes. 

As a friendly reminder, do keep an eye on market changes, control your positions, and manage your risk well. 

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