Every major TradFi player is pricing a rate hike.
As reported by AMBCrypto, the latest CPI figure came in slightly higher than expected, with the US August inflation rising 0.4% compared to 0.1% in July.
It left America’s inflation comfortably above the Fed’s 2% level, with the annual inflation standing at 3.4%, which would allow for the rate hikes once again.
But the story does not end here. As seen in the chart below, nearly every major financial institution now prices in a rate hike from the Federal Reserve next week, with Bank of America pricing in a 75-bps hike.
With the FOMC meeting just over 72 hours away, Bitcoin is naturally under the macro spotlight.
Given such a context, it may seem reasonable to bet against Bitcoin.
According to CoinGlass data, Bitcoin’s Long/Short Ratio for the last 24 hours has dropped to 0.79, hitting the lowest level in more than a month. Such a reading implies a shift in the sentiment among traders ahead of the FOMC decision.
Plus, with banks factoring in a rate hike, there is growing bearishness and, hence, the risk of a crowded short position if Bitcoin were to hold its ground.
According to AMBCrypto, this is where the technical and on-chain strength of Bitcoin [BTC] comes into play. Structurally, if BTC were to hold its ground against the rising onslaught of bears, a significant bear trap setup would become increasingly evident.
Bitcoin’s resilience challenges the rate-hike bearish setup
A single whale move can add to the bear trap thesis even further.
According to Lookonchain, a whale spent $85.42 million in USDC to buy 1,075.6 BTC at an average price of $79,412 of BTC over the last four days.
The accumulation is happening on a background of growing macroeconomic pressure and a bearish outlook for Bitcoin, but the market sentiment is currently in the “greed” territory, meaning that big whales still have a confident outlook on the prospects of Bitcoin.
The key takeaway? It is not only one whale who has been accumulating. As the below chart shows, whale accumulation has picked up since July when Bitcoin’s monthly wick extended down to around $57k.
From there, BTC has rallied some 35% so far, suggesting that the demand from big holders has been consistent throughout the rally.
In short, Bitcoin’s resilience to a hotter CPI print, TradFi’s hawkish stance, and heightened geopolitical risks are far from being a fluke. Rather, it suggests that the smart money is “buying the fear” as the market sentiment remains in the greed territory and accumulation is in full tide.
If this trend persists, Bitcoin’s consolidation around $75k could very well turn into a textbook bear trap.
Given that macro FUD is poised to ramp up next week ahead of the FOMC meeting and CLARITY Act vote, traders and retail investors are likely to continue shorting BTC.
However, should the accumulation by whales persist and Bitcoin continue to hold its ground, this bearish positioning could eventually become fuel for the next upside move.
Final Summary
- Bitcoin is holding strong despite rising rate-hike bets and bearish sentiment.
- Whale buying could turn the $75k range into a bear trap.