Yahoo Finance Bitcoin trades sideways as investors anticipate Fed move
Bitcoin plateaued over the last 24 hours, holding its breath ahead of Friday's Federal Reserve meeting.
The world's preeminent digital asset side-stepped across a $21,000 line for the last day, down almost 11% in the last week.
Data from coinglass.com shows an approximate 60/40 balance of open short and long bitcoin (BTC-USD) positions, with longs taking the larger share.
Read more: Crypto live prices
Investors have held back ahead of Federal Reserve Chair Jerome Powell's address at the annual global central banking conference in Jackson Hole, Wyoming this Friday, August 26.
The highly anticipated speech could give more information on how high US borrowing costs may go and how long they will need to stay there to bring down soaring inflation.
Powell is set to talk about the economic outlook in the US and whether the pace of rate hikes will accelerate, or slack off.
The three-day Jackson Hole economic symposium starts Thursday with Powell scheduled to speak Friday morning.
Analysts expect him to double down on the central bank’s goal of squashing inflation and keeping expectations about future price gains in check.
Edward Moya, a senior market analyst at Oanda, said: “Financial markets will remain in choppy waters until Fed Chair Powell’s Jackson Hole speech on Friday.
“He may struggle to convince markets that he is comfortable with tightening policy and triggering a recession.
"The economy is clearly slowing but it is still too early for the Fed to signal that they will be less aggressive with tightening policy.”
Watch: The Crypto Mile: The Ethereum Merge explained
The effect on bitcoin from the US central bank's monetary policy will depend on how stocks react, as bitcoin moves in lock-step with the S&P 500 (^GSPC).
Stocks have rallied for the last four straight weeks, rising 17% from a 52-week low on June 16, but hedge funds have signalled their wariness of this recent rally.
Referring to the scepticism about the recent market rally, Mark Hackett, Nationwide’s chief of investment research, said: “As powerful as the market rally has been, it is being viewed with substantial scepticism."
Read more: North Korea's crypto activity dangerously underestimated
Hedge funds are betting against the broader stock market by shorting the S&P 500 futures, with short positions reaching a record $107 billion this week.
And, a recent analysis by the International Monetary Fund, IMF, has found an increasing correlation between crypto and Asian equities.
In an IMF blog, the global financial body stated how it was concerned about this trend and warned that crypto can pose financial stability risks.
The correlation between global equity markets and the cryptocurrency market reveals how crypto is becoming fused into the mainstream financial system.
Read more:
The IMF is cautious and hesitant to welcome the integration of crypto with traditional markets.
They fear a contagion spreading from the largely unregulated crypto-sphere into traditional finance through individual or institutional investors who indulge in digital assets or liabilities.
Watch: The Crypto Mile: Crypto, capitalism & Karl Marx
