BTC Lower on Monday

Bitcoin prices have slipped back at the start of the week with the futures market breaking below a key support level. The move comes as traders brace for the October FOMC on Wednesday amidst concerns that the Fed will signal a forthcoming rate hike in December which could prove firmly bearish for risk markets. Indeed, BTC has come under pressure recently amidst the downturn we’ve seen in AI stocks and the broader stock market as a result. Funding fears driven by soaring capex levels, falling bond prices and some earnings misses from big names like Meta and Tesla have combined to weigh on risk assets recently.

Focus This Week

With the prospect of further downside in tech stocks this week if we see any weakness in Microsoft and Alphabet earnings, BTC is at risk of continued downside near-term. This dynamic could be amplified if the Fed gives a clear signal that it intends to hike in December. Notably, perhaps the biggest headwind to the Fed hiking this year is the current AI stock rout we’re seeing and broader market turmoil. As such, if the Fed acknowledges the risks form this situation and any accompany barrier to tightening, BTC would likely be prevented from rallying in this scenario as investor uncertainty would spike higher. As such, it seems that downside risks are more pronounced into Wednesday’s FOMC meeting.

Technical Views

BTC

BTC prices have reversed back under the $83,385 level and while below here, a deeper correction towards the $75,370 level looks feasible. Bulls will need to defend that level to prevent a deeper drop and keep the term outlook in favour of a resumption of the summer rally. Back above $83,385, $94,730 is the next bull target to note.