The correction season is in full swing. In the previous article on cryptocurrencies, we summed up the results of seasonal corrections for more than 10 years. Statistics have shown that the beginning of autumn in 7 out of 10 cases is corrective in the cryptocurrency market.
Buying Bitcoin or Altcoins at the peak of an upward trend is expensive and scary, at this point, it is worth taking profits, and not buying more. To increase the financial portfolio, corrections are excellent, where with a discount of 15.20, or 35%, we are given the opportunity to buy an asset. At this moment, it is also scary, but we have at least some opportunity to balance the risks.
This principle is followed by experienced market participants, including financial funds. The well-known company MicroStrategy during the previous collapse, on September 7, increased the volume of positions on Bitcoin. Now the situation is similar, the first cryptocurrency has sunk by 12%, which is considered a strong price change. If we proceed from the technical instrument RSI, then we have the oversold status. The indicator dropped to the level of 25 p., this is the area of the previous collapse.
That is, buying off the crypto market has high chances.
Analyzing the financial sector, crypto traders have long noticed a positive correlation with the S&P and NASDAQ indices. If the index is in the correction stage, then the cryptocurrency market is falling.
Correction on NASDAQ has been taking place since September 8, strengthening of the corrective course occurred from September 17 to 20. This coincides with the cycles in the cryptocurrency market.
If we analyze the NASDAQ correction cycles, we will see almost the same period. Approximately from the 14th to the 22nd day of each month, the market goes into a planned correction. As if big players are taking profits at this moment, and after that, I again buy assets into my portfolio.
Following this theory, an upward cycle may re-emerge in the coming week, which will positively affect the cryptocurrency market.
Concerns about the Fed's actions
On September 22, the results of the autumn meeting of the Fed will be published, where market participants are concerned about the further prospects of monetary policy in the United States. It is assumed that the key interest rate will remain unchanged at the level of 0-0.25%. The most important point is the fate of the quantitative easing program, which could hit the US stock market very hard. This, in turn, will affect the cryptocurrency market in terms of a deep decline.
At the moment, there is no clear confirmation of the curtailment of the quantitative easing program, these are only rumors. The Fed and the White House are very wary of this topic, as they are well aware of what could happen on Wall Street.
In this situation, we are only setting the stage for the worst-case scenario in the market.
What is happening on Bitcoin and Ethereum trading charts?
Bitcoin has already lost more than 15% of its value, which has led to a control convergence with the psychological level of $40,000. The market is already following in the area of interaction of trade forces, this may benefit buyers. In this situation, one should not expect a quick recovery in the Bitcoin exchange rate, primarily because there remains a high risk of uncertainty caused by a possible change in the Fed's monetary policy. If the quantitative easing program is not curtailed at the upcoming meeting, but, for example, this step is postponed, then the US stock market will go up, followed by the crypto market. This scenario, quite possibly, will return the Bitcoin exchange rate to the levels of $46,000- $48,000 in two weeks.
If the Fed takes tough measures and starts curtailing the quantitative easing program, then in this case the US indices will fall by 5-8%, while the crypto market will sink by 15-30%.
Ethereum completely repeated the cycles of Bitcoin, where in just 2.5 weeks the rate of the second cryptocurrency fell by more than $1,000. Currently, the price range of $2,600/$2,850 serves as a support area, relative to which buyers are trying to restore the ETH exchange rate.
The pivot point has a fundamental rationale and could be the beginning of an outgoing turn towards the $4,000 level. It is worth considering that a negative scenario for the Fed may violate all technical plots, where the support area will be immediately broken through.
The index of emotions (aka fear and greed) of the crypto market is at the level of 27 points, decreasing by almost half as compared to the last week. The fear of a possible collapse is visible to the naked eye, but do not rush to conclusions, the market is still in a bullish trend.
