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| By Marija Matic |
The crypto market is experiencing the relative calm before the storm as investors prepare for what promises to be an interesting week, with the Federal Open Market Committee meeting scheduled to take place.
Bitcoin (BTC, Tech/Adoption Grade "A-") has been hovering around $17,000 for the past 12 days, with meager moves within a 1% range in either direction.
But this is about to change.
Both BTC and Ethereum (ETH, Tech/Adoption Grade "B") have been trading above their respective 21-day moving averages. In fact, ETH has been using its 21-day MA of $1,237 as support for almost two weeks.
BTC/USDT 4h chart shows Bitcoin has been held by the support level of $16,900 in December:
Click here to view full-sized image.
With solid support in place, investors are anticipating volatility to reenter the market when the FOMC meeting minutes are released.
The Federal Reserve is expected to deliver a smaller rate hike of 50 basis points, rather than the 75-bps hike we've seen in the previous four meetings.
A 50-bps hike would bring the Fed fund rates to between 4.25% and 4.5%.
The Fed is also expected to continue reducing their balance sheet, which has dropped from $8.96 trillion to $8.58 trillion over the past seven months.
Meanwhile, renewed fear, uncertainty and doubt are surrounding Binance.
The exchange giant has been under investigation since 2018 for possible laundering of illicit funds and criminal sanctions violations. There are three solutions to this lengthy, ongoing investigation:
- Binance is prosecuted,
- The investigation is dropped, or
- A settlement is reached.
A recent Reuters report claims there is a split in the U.S. Justice Department as to which of the three resolutions it should pursue. Prosecution of the exchange would be very bad for the already wounded crypto market as it facilitates half of all trading volume.
But Binance isn't fighting empty-handed. It's hired at least five ex-officials from the IRS Criminal Investigation's Cyber Crime Unit last year — including the new global head of investigations, Tigran Gambaryan — to help.
Gambaryan is a celebrated cyber-investigator who has helped bring down the online black- market Silk Road. His team is supposed to detect and prevent crimes on Binance and work closely with law enforcement.
In addition to that team, Binance claims they have around 300 investigators "representing virtually every single major international law enforcement agency across the globe."
Notable News & Tweets
- South Korea's Ministry of Justice is requesting investigative assistance from the Serbian government, as it suspects Terra's Do Kwon might be in Serbia.
- FTX's Sam Bankman-Fried says he will testify remotely at a congressional hearing tomorrow.
- The Bank of England is seeking applications for a £200,000 CBDC wallet prototype.
What's Next
As we can see, the market is still busy sorting through the aftermath of failed crypto projects. So, it's not hard to see how the potential prosecution of Binance would wreak havoc on the market.
We can only hope the investigation will end with a settlement. Considering the strength of Binance's legal team, I believe there's a high chance of that.
The FOMC meeting is of lesser concern right now, but still significant. Traders will be watching the hike announcement and Fed Chair Jerome Powell's comments like hawks.
If there is a surprise 75 bps hike, I expect BTC to drop below its support of $16,900, pulling the crypto market into another leg down. But there is a very small chance for 75 bps, as 50 bps is almost certain.
One thing is for sure: Crypto will become more volatile as the week goes by.
Hold on tight.
Best,
Marija Matić
